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VA Home Loans
VA, also known as the Department of Veteran Affairs, offers to
qualifying current and ex-members of the Armed Forces (to include the Reserves and
National Guard) guaranteed mortgages up to 100% of the value of the property they are
purchasing. Based upon a person's "eligibility", home loan amounts can be as
high as $240,000.
VA home loans are fixed rate mortgages with terms of either 15 or 30
years. Since the VA guarantees the mortgage, there is no mortgage insurance.
However, the VA requires the borrower to pay a funding fee ranging from 0.5% to 3% for the
mortgage (this fee is waived for qualifying disabled veterans). In addition, VA
home loans are fully assumable by a qualifying borrower.
Only applicable for
buyers who intend to purchase the home as a primary residence.
Advantages |
Disadvantages |
| The main advantage of VA
home loans is
that the borrower can finance 100% of the value of the property and wrap the funding fee
into the loan. In addition, there is no mortgage insurance which further adds to the
savings for the borrower. Rates are comparable to other conforming
home mortgages and the
seller can pay 100% of the borrower's closing costs. |
The only distinct disadvantage of a
VA home loan is the initial funding fee. If wrapped into the loan and the borrower
decides to finance 100% of the value, then they are instantly "upside down" on
the property, meaning they owe more than they purchased it for. In addition, the
borrower may only take out a VA home loan with a spouse or another qualifying co-borrower
(non-military or non-exmilitary co-borrowers are not allowed on VA home loans unless legally
married to the borrower). |
Underwriting
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Standard VA underwriting guidelines for
qualifying borrowers |
Mtg. Insurance
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None |
Documentation
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Standard documentation required from borrower |
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