What is a VA Loan?

Purchasing a home is a significant milestone, especially for first time home buyers. While there are multiple options available for home financing and buying a home, if you are a veteran, then a VA Loan might be an option to really consider. What is a VA Loan, exactly? Let’s dive in and go over the benefits, potential drawbacks, and eligibility requirements.

What is a VA Loan?

A VA Loan, or Veterans Affairs Loan, is a type of home mortgage offered in the United States, backed by the Department of Veterans Affairs. Designed primarily for veterans, active-duty service members, and select military spouses, this loan can provide several advantages over a conventional loan. The VA Loan's main attraction is its favorable terms, which can often be hard to match with other loan types.

Pros and Cons of a VA Loan

Like any home loan, there are options that need to be considered when selecting one that is right for you. While a VA loan may be exclusively offered to Veterans, there may still be better options. That said, here are some of the pros and cons of a VA loan.

Pros of a VA Loan:

• No Down Payment Required: VA Loan allows purchasing a home with no money down, helping veterans who might not have the funds saved up. Learn more about buying a home with no money down.
• Competitive VA Loan Interest Rates: Usually lower than conventional loans, saving money over time.
• No Private Mortgage Insurance (PMI): PMI is not required even if your down payment is less than 20%.
• Flexibility in Qualification: Easier qualification requirements compared to conventional loans.

Cons of a VA Loan:

• VA Funding Fee: A one-time fee that can be rolled into the loan or paid upfront.
• Limited to Primary Residences: VA Loans can’t be used for vacation or investment properties.
• Loan Limits: Some limits may apply, but full entitlement removes this cap as of 2020.

Eligibility for a VA Loan

When considering a VA Loan, it's essential to understand the eligibility requirements set by the Department of Veterans Affairs. First and foremost, VA Loans are generally available to veterans, active-duty service members, and select military spouses. The specifics of eligibility include:

• Service Requirements: Vary depending on the time served (WWII, Vietnam, peacetime, etc.).
• Certificate of Eligibility (COE): Obtainable via the VA.gov housing assistance page. It proves eligibility based on service record.
• Credit and Income Requirements: Credit and income will be assessed like other loans. Better scores mean better rates.
• Spousal Status: Surviving spouses may also be eligible under certain conditions.

Apply for a VA Loan with Valor Mortgage

If you're considering buying a home, especially if it's your first home, and you meet the VA Loan eligibility requirements, this could be an excellent opportunity for you.

Conventional loans, while popular, might not offer the same benefits as a VA Loan, especially in terms of down payment and interest rates.

If you are looking to purchase a home in Tennessee or Kentucky, we’d love to help. Valor Mortgage is here to guide you through every step, from understanding closing costs to making that final payment.

Just contact us today, and tell us in the message you are a veteran! That will give us a heads up to look out for a VA Loan option for you.