Are you a veteran home buyer looking for a home in Colorado Springs? Veteran home buyers are entitled to the unique advantages of a VA home loan. VA home loans change the home-buying process slightly compared to conventional home loans. But they come with many benefits for veterans, as long as they meet the eligibility criteria.
If you’ve never bought a home with a VA loan before, you may not know what benefits to expect. At Your Home Sold Guaranteed Realty - Barb Has the Buyers Team, our team is proud to be veteran-owned and operated, so we understand the intricacies of the home-buying journey for veterans.
In this article, we’ll outline the top five benefits of VA home loans, so you can have the knowledge to determine the best loan product for your needs.
5 Advantages of a VA Home Loan
No Credit Requirements
VA home loans come with less strict financial qualifications compared to many conventional loans. For example, the VA itself does not enforce any specific credit score requirements. Instead, individual lenders determine the qualifying credit scores for VA borrowers, which typically range from 580 to 660.
And while the VA sets a maximum debt-to-income ratio limit of 41%, it is still possible to qualify for a VA home loan even if your debt-to-income ratio is higher. This can be achieved by demonstrating sufficient residual income.
It’s important to consult with your lender to understand their specific requirements regarding credit scores and debt-to-income ratios.
Avoid a Pricey Down Payment
One of the major advantages of a VA home loan is that it eliminates the need for a down payment.
This is particularly beneficial for veteran home buyers who may find it challenging to save a substantial amount of money for a down payment. For conventional home loans, the average down payment typically falls between five to ten percent of the home’s sale price.
Some buyers, especially those who have purchased homes before, may even need to provide a down payment of around 20%. And even Federal Housing Administration (FHA) loans require a minimum down payment of 3.5%.
But with a VA home loan, you can purchase a qualifying home without a down payment, regardless of the home’s sale price or the lender’s requirements. This allows you to allocate your funds towards other expenses related to homeownership.
No Need For Private Mortgage Insurance
Private mortgage insurance (PMI) is designed to protect lenders in the event of borrower defaults. In the case of conventional loans, borrowers are typically expected to provide a down payment of 20% in order to avoid paying for PMI.
For those unable to meet the 20% threshold, PMI becomes a requirement resulting in an additional 0.5% to two percent on top of their monthly mortgage payments. Even FHA loans require mortgage insurance.
However, with a VA home loan, you don’t need to worry about paying an additional amount for private mortgage insurance. This provides you with greater financial flexibility and the opportunity to invest in your home without the added expense of mortgage insurance.
No Loan Limits For VA Entitlement
VA entitlement refers to the coverage provided by the VA in the event you default on your loan. Previously, there were loan limits on VA entitlement in place for all VA borrowers. But now, this is no longer the case.
Currently, the VA will repay your lender up to 25% of the loan amount, as long as you qualify for full entitlement. There are several ways to qualify for full entitlement:
- If you have never utilized your home loan benefit before.
- If you have sold a property and completely paid off its VA loan.
- If you have experienced a foreclosure or compromise claim that resulted in the full repayment of your VA loan.
If you do not have full entitlement, the amount that the VA will cover is determined by the loan limit set by your county. It is important to be aware of your entitlement status and understand the potential coverage provided by the VA in your specific circumstance.
VA loans are a lifelong benefit, which means you can utilize a VA home loan every time you purchase a new property. Furthermore, you have the flexibility to obtain multiple VA loans simultaneously, as long as you have sufficient remaining entitlement.
It’s important to note that VA loans are specifically designed for primary residences. However, this doesn’t restrict you from renting out your first home and living in a second property. As long as you meet the occupancy requirements set by the VA.
If you’re considering purchasing a second primary residence using a VA loan, it’s advisable to consult with your lender or a realtor who specializes in assisting veteran home buyers. An expert can make sure you have a clear understanding of the requirements and options available to you.
Our Realtors Can Help You Buy a Home With a VA Loan
If you’re in the market for a new home, you’ll need a realtor who’s knowledgeable about the advantages of a VA home loan. At Your Home Sold Guaranteed Realty - Barb Has the Buyers Team, we’ve served veteran home buyers in the Colorado Springs area for years.
In fact, our real estate business is veteran-owned and operated, and routinely gives back to veterans in the community. This means we have first-hand experience to help buyers navigate the market successfully.
On top of our experience, we also offer several buyer guarantees that make buying a home with us risk-free. This includes our Buyer Satisfaction Guarantee, which ensures you’ll be satisfied with your new home. If not, our team will buy it back from you any time within 18 months of the date the deal closes.
To learn more about what it’s like working with our team, give us a call at 719-301-1802. You can also fill out the form on this page.