When you decide to use a VA Loan, you may be excited about the prospect…
If you are a Veteran, there are a few perks that you get when buying a home thanks to your service. One of those is the VA Loan.
VA stands for Veterans’ Affairs. This is the office that guarantees the loan and makes it available for Veterans, some National Guard members, and some families. The loan paperwork is done through a lender but the Department of Veterans’ Affairs secures the loan. This means that they guarantee the loan, which allows the lender to accept a lower down payment than in other cases.
The VA loan began in 1944 as part of the GI Bill. Servicemembers returning from World War II were able to get great financing on a home purchase. Other benefits of the World War II GI Bill included tuition for college and insurance. Now, the VA mortgage loan is the only part of the original benefits that is still in effect. Other benefits, such as college tuition, have been moved to other offices.
The VA loan does not require a down payment in most cases, a big benefit when it comes to a home purchase. Since down payments can be up to 20% of the overall loan amount, it is often the biggest hurdle that first-time home buyers need to get over in order to purchase a home. Some other types of mortgages offer a lower down payment but they also come with extra costs, such as the requirement to pay for private mortgage insurance.
The VA loan, on the other hand, does not have a requirement for PMI. You can purchase a home with a 0% down payment in almost all cases. There is a minimum service requirement but it is designed to be available to many people on active duty, Veterans, military retirees, National Guard members, Military Reservists, and some military families.