Home Buying as a Military Veteran: What to Know About VA Loans

A Veteran's Administration (VA) loan is one of the most generous benefits offered to America's military veterans. Many veterans find the VA loan better than conventional real estate loans and other government-funded mortgages.

Perhaps the major advantage of a VA loan is that there's no need for a down payment. Generally, conventional loans call for a down payment and may cover only 80 to 85 percent of a home's value.

A VA loan often enables veterans to buy homes when they don't otherwise qualify for a conventional loan. Backed by the U.S. Department of Veteran Affairs, these loans let homebuyers get lower rates. Plus, veterans can qualify with lower credit scores, and will not have to pay Private Mortgage Insurance (PMI).

An additional bonus for veterans who receive monthly disability benefits is that they don't need to pay the VA funding fee, which can be from 0.5 to 3.3 percent of the overall loan. 

Let's look at who may qualify for a VA loan and how to obtain one:

Eligibility for a VA Loan

Who is eligible for a VA loan? A Certificate of Eligibility, or COE, will be given to veterans or family members who meet one of these requirements:

• Served 90 consecutive days of active service during war
• Served 181 days of active service during peacetime
• Has been an active member of the National Guard or Reserves for 6 years or more
• Was married to a service member who died in the line of duty or from a service-related disability.

To receive this COE, apply online, or mail in an application. 

Requirements for Getting a VA Loan

As mentioned above, veterans with lower credit scores can qualify for a VA loan. Nevertheless, there are some requirements for getting a VA loan, such as:

1. Enough income to afford the home
2. A reasonable credit score (will vary by lender)
3. Application for a VA Home Loan Certificate of Eligibility
4. Have all necessary military documentation, including the DD214, which is issued when a service member leaves the military
5. According to the VA website, certification that the buyer will occupy the home

Find a Real Estate Agent Who's Familiar With VA Loans

Homebuyers seeking a VA loan should work with an agent who is familiar with the VA loan process. This is particularly important regarding the fees involved with VA loans. The VA funding fee is a one-time payment. It is owed by the veteran on a VA direct home loan or a VA-backed loan. This fee helps lower the loan cost for U.S. taxpayers since the veteran doesn't have to pay down payments or monthly mortgage insurance. In most cases, veterans with disabilities are exempt from this fee. 

Moreover, an agent with VA loan experience won't waste your time with purchases you can't buy with your loan. They may also be better equipped to negotiate with the seller's agent. 

Good luck on your road to homeownership. If you're a veteran ready to pursue a VA loan, consult your VA Benefits Advisor today. 

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