As you might expect, a VA loan is tailor-made for current military members, veterans, and their spouses, as well as other beneficiaries the Department of Veterans Affairs deems eligible. However, the VA doesn’t physically lend you the money. Instead, it insures your loan in conjunction with an outside lender. You are required to pay a VA funding fee for these loans, though, with rates ranging from 1.25% to 2.4% depending on how much you’re putting toward your down payment.
The main draw of a VA loan is its lack of a down payment requirement, meaning it can be used to pay for the entire value of your home. This is an especially valuable feature if you’ve got the income for monthly mortgage payments, but have struggled to save for a down payment. The VA also lowers the closing costs typically associated with these mortgages, helping to keep your initial costs as low as possible.
A VA loan is a top benefit of military service for eligible veterans, service members and qualifying surviving spouses. It allows you to qualify for a low-cost mortgage when you’re looking to purchase or refinance, even if your credit isn’t perfect.
If you currently serve in the military or are a veteran, you’re potentially eligible for a VA loan. This article will explain what you need to know about these special government-backed loans, including rates, qualification requirements, and benefits. If you are a disabled veteran, VA loans come with additional benefits, so be sure to read on.
The VA offers specific guarantees to private lenders that handle VA loans. Because of these guarantees, lenders offer loans that typically feature no down payment to veterans, and they may have less stringent requirements than other loans.
The VA loan is the only program that lets you access 100% of your equity in a cash-out refinance, a key difference from standard refinancing requirements. Rocket Mortgage requires your credit score to be at least a median of 620 or higher to do this. Otherwise, you can take out up to 90% of your home equity if you have a median score of 580 or better.