The VA loan was created to help service members purchase homes. It is a military loan guaranty program that is guaranteed by the federal government. This loan is available to active and retired military with VA benefits.
All recipients of a VA Loan must first obtain a Certificate of Eligibility (COE), a formal document that explains what VA entitlement you possess, through the Department of Veterans Affairs. A VA approved lender can help you obtain your COE. Depending on eligibility VA buyers can purchase a home with 100% financing (0% down payment).
Terms and Regulations
Although the VA Loan is a federal program, the government generally does not make direct loans to veterans. Instead, private lenders finance the loan while the Department of Veterans Affairs offers a guaranty. This guaranty, which protects the lender against total loss should the buyer default, provides incentive for private lenders to offer loans with better terms.
In most parts of the country, veterans who qualify for the VA Loan can purchase a home worth up to $424,100 without putting any money down; however Hawaii most counties in Hawaii are considered “high-cost counties” meaning you are able to purchase homes far exceeding that amount without a down payment. VA loan limits change yearly and differ from county to county. It is best to consult with a VA approved lender for current loan limits. As of January 1, 2020, there are NO LOAN LIMITS if you have full entitlement available, other qualifications may apply.
VA Funding Fee
Even though VA loans require less than 20% down payment, there is no PMI required. There is however a VA Funding Fee. The VA Funding Fee goes directly to the VA to ensure the program keeps running for future generations of military home buyers by removing any additional burdens off tax payers and veterans. VA funding fees vary based on your military status, branch of service, and VA eligibility status and does not apply for veterans with service-connected disabilities. For example, if this is your first time using the VA Home Loan Program, the funding fee is typically 2.15 percent of the purchase price. For subsequent use of your VA Loan benefit, the fee is 3.3 percent. The VA funding fee is normally rolled into the loan amount, meaning that VA borrowers can purchase property with little to no out of pocket costs. The VA also limits closing costs for veterans and most VA lenders will cover any “non-allowable” costs.
Both single family homes as well as condominiums. Condominium projects must be VA eligible to qualify for a VA loan. It is best to consult with your mortgage loan originator for current VA loan guidelines, eligibility, purchase limits, VA approved condos, etc.
Register here to learn more and be put in touch with a preferred VA approved Loan Officer.