What is a VA home loan?
A VA loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs (VA). The program is for American veterans, military members currently serving in the U.S. military, reservists and select surviving spouses (provided they do not remarry) and can be used to purchase single-family homes, condominiums, multi-unit properties, manufactured homes and new construction. The VA does not originate loans, but sets the rules for who may qualify, issues minimum guidelines and requirements under which mortgages may be offered and financially guarantees loans that qualify under the program.
VA Loan Limits
The baseline limit has increased for 2018, up to $453,100 from $424,100 in most areas. In some places where homes are more expensive, limits are higher.
Some areas of the U.S. have expensive housing markets, and to accommodate this, limits in certain places are higher than the baseline limit of $453,100. By FHFA’s definition, these high-cost housing areas are ones in which 115% of the local median home value is above the baseline loan limit. In other words, these are areas where the average home is notably more expensive. Limits in these areas are set at the median home value.
In the 48 contiguous states, the high-cost ceiling is $679,650, which is 150% of the baseline of $453,100. Special legislation exists for Alaska (AL), Hawaii (HI), Guam (GU), and the U.S. Virgin Islands (VI) where loan limits can exceed $679,650. For example, Fort Shafter, HI has a loan limit of $721,050.
Places like Key West, FL, Virginia Beach, VA, and Los Angeles, CA, have homes priced well over the limit in many popular neighborhoods. Limits are specific to each county. It’s common to find homes exceeding the limit in some of the most expensive housing communities.
VA Loan Benefits
- No down payment required.
For many service members, this is the most attractive feature of a VA loan. You can become a homeowner without having to save for a down payment.
- Lower interest rates.
VA loans typically offer interest rates well below those of conventional borrowers.
- No monthly mortgage insurance premiums.
MI payments can costs borrowers hundreds every month, an expense you'll never have with a VA loan.
- No prepayment penalty.
With a VA loan, you can sell or refinance at any time without having to pay a penalty.
- Reduced funding fees.
You can qualify for reduced loan fees or exemption from funding fees for Veterans receiving service-connected disability compensation.
- Ability to finance the VA funding fee.
The funding fee can be rolled into the entire loan amount.
- Less than perfect credit usually accepted.
You don't need to have perfect credit to qualify for a VA loan.
- 100% cash out refinance.
Use your home's value and pull cash out to pay off debt, make repairs to your home, remodel, or spend any way you wish.
VA Home Loan is available in the following areas/cities
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