What are the benefits of being a veteran when looking to buy a home?
The main benefit to a veteran looking to buy a home ion Sacramento CA is the VA home loan. Also the veteran’s administration could have other programs that help a Vet in the home buying process. It is a good idea to make sure you work with a real estate agent who understands the VA home loan process. So they understand the eligibility process of conventional loans or how non VA loans differ from the VA loan process.
The Department of Veterans Affairs (VA) offers home loans and grants. These programs help service members, veterans, and surviving spouses to buy, refinance, or modify their homes. The VA guarantees part of the loan, meaning they will cover a portion of the loan if you default. Doing this allows lenders, such as banks and mortgage companies, to offer you more favorable terms.
A VA loan works the same as most other home purchases, with a buyer making a written offer to purchase a home and then going through an approval process with a lender. The purchase price, closing cost assistance, inspections, appraisal, loan and other contingencies are part of the home buying process. If the vet is buying a home in California they could be eligible for the CalVet program. Check out here if you are eligible for the CalVet program.
VA loan benefits
VA loan programs offer the ability for veterans to access a better loan and to acquire a home without a mortgage. Veterans may qualify for a VA loan with less money in their pockets than they would for traditional loans. A VA loan can help veterans avoid private mortgage insurance.
First time home buyers find the veteran programs helpful. Not having to make a down payment can make it possible for veterans to buy a first home. Saving the cash for the first down payment often takes years. VA loans also come with low-interest-rate mortgages, don’t require mortgage insurance, and have more forgiving credit eligibility requirements.
What type of dwellings are eligible for a VA loan?
Single family homes and condos are certainly eligible for VA financing. A duplex, a triplex or a four-plex all qualify for a VA loan. Manufactured homes, mobile homes, Prefabricated or modular homes are eligible for VA financing. Real estate investing for veterans can be done with some work. An investment property is a real estate property that is purchased with the intention of earning a return on the investment, either through rental income, or the future resale of the property.
7 key benefits of the VA home loan
1. There is no down payment requirement for a VA loan
The no down payment requirement is the most well-known VA loan benefit. Qualified VA Loan borrowers can purchase up to a county’s conforming loan limit (add to terms with link) without a down payment. There is a possible exception. It is when the lender may require a down payment as security for some borrowers, but VA itself does not require a down payment. This is very helpful for people who are going from renting to first time home buyers.
Conforming Loan Limit (CLL) VALUEs. Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit” (CLL) value. The CLL also creates VA loan limits. Loans above this amount are known as jumbo loans. 2022 conforming loan limits for California is $647,200 and goes up to $970,800 for high-cost counties (aka. high balance mortgage loans) for one-unit properties.
2. There is no private mortgage insurance with a VA loan.
There is no private mortgage insurance (PMI) with VA loans. But VA loans do come with a mandatory funding fee that goes directly to the Department of Veterans Affairs. Borrowers with a service-connected disability are exempt from paying this fee. This will help save money on the monthly payments and upfront costs. This will make a Sacramento or Placer County home more affordable.
In 2022 the VA funding fee rates are as followed:
Check here for more update and situations
| If your down payment is… | Your VA funding fee will be… | |
| First use | Less than 5% | 2.3% |
| 5% or more | 1.65% | |
| 10% or more | 1.4% | |
| After first use | Less than 5% | 3.6% |
| 5% or more | 1.65% | |
| 10% or more | 1.4% |
3. VA loans limiting or encouraging the seller to pay some closing costs.
Closing costs are part of getting a mortgage. The VA actually limits what fees and costs veterans can pay at the time of closing. This is not always a good thing. Sometimes it can complicate a real estate transaction. The veteran home buyer can get some closing cost assistance.
The home buyer/s can ask sellers to pay all of their loan-related closing costs and up to 4 percent of the purchase price for things like prepaid taxes and insurance, collections and judgments. Do you think the seller’s will want to do this? Do you think some seller’s will not accept an offer if it is disclosed that it will be a VA loan buyer? I have had several deals made more difficult to close because of expectations of the veteran buyer thinking they will automatically get these seller’s concessions. Home buying is the art of negotiations. The veteran buyer with a VA loan can add value to the transaction or be a problem. It is up to the real estate agents to negotiate a good win-win deal.
4. The VA loan can have looser credit requirements or not.
To understand some of the other benefits you need to understand what a VA Loan is. A VA loan is a mortgage issued by private lenders and partially backed, or guaranteed, by the Department of Veterans Affairs. So it is clear, the Department of Veterans Affairs does not make a VA Loan. The VA Loan is a guarantee to the lender for part of the loan value. That is right. Not the whole loan but a percentage of the loan value.
Lenders will still check your credit scores, income level, and other factors to decide approval, plus the interest rate you’ll get so the borrowers meet lender requirements. On one hand the lender feels they can have looser loan standards because part of the loan is guaranteed. But on the other hand it is hard and costly to foreclose on a home loan. How the lender balances these issues will dictate how the next few benefits play out. And why it is good to check out more than one lender for a VA loan.
5. Some VA loan lenders can work with higher DTI ratios to make a loan.
VA lenders generally use the standard of 41 percent of your gross monthly income on major debts, such as a mortgage payment or student loans. But some lenders want more VA loans on the books and accept a higher DTI ratio and still make a VA home loan. Some lenders may go up to 55 percent or more depending on your ability to pay back the loan based on income and other credit issues. This can make it easier for some buyers to maximize their home purchasing power. The monthly mortgage payment is impacted by the interest rates at the time of the loan. VA loans are known for their competitive rates.
6. Some VA loan lenders can work with foreclosure and bankruptcy better.
Some VA loan lenders will work with the issue of foreclosure and bankruptcy. Others will not. It is possible to secure a VA home loan just two years removed from a foreclosure, short sale or bankruptcy. In some cases, veterans who file for Chapter 13 bankruptcy protection can be eligible just a year removed from the filing date. Even if the veteran has a foreclosure on a VA-backed mortgage, he could still be eligible for another.
7. The VA home loan is a lifetime benefit.
A veteran can use the guaranty multiple times. But remember this is the Department of Veterans Affairs. There are rules and exceptions you need to know about. If you have an existing VA home loan, you can apply for an Interest Rate Reduction Refinance Loan (IRRRL) to save money with a better interest rate. Check out the Department of Veterans Affairs website for more answers.
A VA Certificate of Eligibility is required to determine if you have eligibility for the VA Home Loan benefit. Learn about VA home loan eligibility requirements for a VA direct or VA-backed loan. Find out how to request a Certificate of Eligibility (COE) to show your lender that you qualify based on your service history and duty status. Keep in mind that for a VA-backed home loan, you’ll also need to meet your lender’s credit and income loan requirements to receive financing.
What is the difference between a Vietnam veteran and a Vietnam era veteran?
Vietnam era veterans are those who served during the time of the Vietnam War, but didn’t set foot in the country of Vietnam. The Vietnam vet is one who was assigned within the combat zone of the country and its surrounding waters.
Other veteran eras
World War II. December 7, 1941, through December 31, 1946 is inclusive. If the veteran was in service on December 31, 1946, continuous service before July 26, 1947, is considered World War II service.
Korean conflict. June 27, 1950, through January 31, 1955 is inclusive of veterans who served.
Vietnam era. The period beginning on November 1, 1955, and ending on May 7, 1975 is inclusive of a veteran who served in the Republic of Vietnam during that period.
Persian Gulf War. August 2, 1990, through date to be prescribed by Presidential proclamation or law is inclusive of veterans who served.
Our veteran benefits have limits.
This could come as a shock to some veterans but our benefits have limits. I am no VA benefit expert. I have tried to use some of my veteran benefits and was told that program ended. So there is a time limit on some of our benefits. Also some benefits have a limit to how much money can be used. The VA is a big government agency and can find ways to limit benefits in a very frustrating way. So my personal advice is to not assume you have a benefit until you get a clear understanding from the VA.
This home buying guide for veterans is only the beginning.
If you are a veteran looking for a home, knowing your benefits is a big help. Not every home is eligible for the VA program and not every lender has an understanding of the VA loan procedure. Finding an experienced real estate agent can be a great way to get your new home quicker. This guide will also help you determine whether you are qualified to purchase a VA home or not. Sacramento is a veteran friendly community. Here is a home buyer’s guide with insights to the home buying process. The home buyer’s financial guide will help with the money issues when buying a home.
Why people get California VA loans?
VA loans are available to individuals who serve in military forces. There are BIG advantages to a VA loan over a conventional loan, and there are NO DOWN PAYMENTS necessary. All purchases are able to be funded at 100%. Added to a small deposit, there are also huge advantages such as you do not require great bank credit. This VA loan guarantee is offered by Veterans Affairs. There are no Down Payments for qualified veterans. No Down Payment Benefits enable veterans to get into their own home without spending years accumulating enough money for a down payment of 3.5% – 5%. Also, a California house could be bought with a Cal Vet loan.
Make sure to use a VA-savvy real estate agent
When applying for VA loans, make sure to choose Sacramento Realtor Dan Parisi who knows the VA Home Loans process well. I see many people using agents who can’t explain to them the VA system. The VA will not underwrite all houses. The veteran will be very careful to employ an agent who understands VA mortgage loans and VA appraisal processes and what this is like. Our realtors that specialize in VA loans and help veteran get the home they want. When you purchase a house through a VA department, you must look for a VA Home Loans provider that meets your VA Home Loans requirements. We can also help veterans sell their property.
How to begin looking for a home can create problems. Each person has their own priority of what is important. For some it is where to buy a home in Sacramento or in Placer County. Others, it is the must haves of the house the wants, needs and must have list. Coffee Real Estate works with home buyers to find the right home for them. Let’s begin the process today.
