Looking to purchase your first home? Congratulations! Buying a home for the first time is a huge and exciting milestone in life, and thanks to the Department of Veterans Affairs (VA), it is more affordable than ever before. Watch below as Eric has some helpful tips on how to buy a house.
Buying Your First Home? Use a VA Loan!
The VA loan is a mortgage loan designed to provide house financing and offer certain basic entitlements to those who have served or are serving in the military. It’s perfect if you are a veteran and buying your first home. It is one of the best loans options on the market designed for veterans and qualifying military members who are buying. Unfortunately, many veterans are either not aware of the VA loan or are misinformed about it, so relatively few first-time military home buyers take advantage of the VA loan, choosing instead to use other, more expensive loan types. Some common misconceptions about VA loans include the following:
- No down payments make the VA loan riskier than other loans
- You need to have good credit to get a VA loan
- You can only use VA loans once
All three are false! The VA loan is not only safer and more lenient than other loan types on the market, but it can also be used throughout a military member’s life! Here are a few of the main benefits of using VA loans, particularly as a first-time homeowner.
- No Down Payment
Most experienced home buyers use the money they accrued from selling their prior home as the down payment for their new house. However, for those buying a home for the first time, acquiring enough money to pay the down payment up front can present a problem.
Fortunately, with VA loans, eligible military members do not need to pay a down payment in order to buy a home. Since the government supports a portion of every VA loan, lenders have a federal guarantee that eliminates the need for a down payment. Military home buyers are also exempt from paying private mortgage insurance (PMI), which can cost an extra several hundred dollars a month. With this benefit, first-time home buyers can buy a house without having to collect several thousand dollars in personal funds.
- Flexible Credit Qualifications
In order to qualify for a home loan, banks often require home buyers to have a credit score over 620. Since establishing credit can take a long time, many first-time home buyers struggle to achieve the necessary high credit score and are rejected for a home loan.
Luckily, since VA loans are backed by the federal government, there are no minimum credit score requirements. Many approved lenders chose to maintain a credit score minimum of 620, but we at Low VA Rates have no requirements for a minimum score under normal circumstances.
Low VA Rates still considers credit scores when deciding whether or not to approve the potential borrower for a home loan, but we do not deny anyone a loan based solely on their credit score. We take into account other factors, such as your debt-to-income ratio and residual income. This makes it much easier for first-time home buyers with relatively short credit histories to qualify when applying for a VA-backed loan.
- Lower Funding Charges
The VA also offers a particular benefit exclusive to first-time home buyers, which is that veterans buying their first home are charged a lower funding fee.
The VA offers many incredible benefits to veterans and active military members throughout the country, and they require those who do a purchase or refinance VA loan to pay a small fee in order to cover costs for losses from the few defaulted loans.
The funding fee for first-timers is only 2.3% of the loan. The VA home loan is an earned benefit, so it can be used throughout a veteran’s life. However, any subsequent users will have to pay 3.6%.
Make the Call
So if you are a buying your first home, we are here to help. Low VA Rates specializes in serving veterans, and we are dedicated to helping eligible first-time home buyers use the VA loan. Call us now for a free VA loan consultation 866-569-8272.