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U.S. Department of Veteran Affairs (VA) Mortgage Loan Programs
Much like the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs or VA has been around for decades to help the service members of the United States (and their spouses) become homeowners.
The VA offers a variety of lucrative benefits to service members in terms of home financing including purchase mortgage options where, in some cases, borrowers do not have to put any money down.
Like other government mortgage programs, the VA insures the mortgage in case of borrower default. Private lenders then can provide VA mortgages to borrowers with more favorable terms due to the reduced risk.
Applicants typically need to obtain a certificate of eligibility (COE) prior to applying1. This can be done online through the VA benefits portal or via mail. Some preferred VA lenders like New Century Mortgage can even help you obtain a certificate of eligibility for your next purchase or refinance transaction.
Let’s take a look at a brief history of the U.S. Department of Veteran Affairs, along with the types of home mortgage loan programs it offers to eligible service members.
U.S. Department of Veteran Affairs (VA): A Brief History
The history of the U.S. Department of Veteran Affairs stems back to the 1940’s during WWII when the U.S. passed the G.I. Bill, formally known as the Servicemen’s Readjustment Act, which was enacted to provide additional benefits to U.S. active duty service members and veterans. Part of the act allowed the VA to insure loans made by lenders to qualified military personnel.
While some changes to the law occurred over the years to incorporate new and improved flexibilities, the Veterans Housing Benefits Improvement Act of 1978 and Veterans Home Loan Program Amendments in the early 1990s loosened restrictions on which military members could qualify for benefits. This allowed more veterans to qualify for VA insured mortgage loans.
The VA has several home loans programs available to eligible borrowers and continue to gain favor due to its competitive rates and repayment options
VA Home Loan Programs
While FHA loans might appeal to a broader audience, the VA’s home loan programs are targeted for active duty, reserve, or retired service members of the armed forces and surviving spouses.
The VA also requires you obtain a certificate of eligibility prior to starting a loan application. Once you have a certificate of eligibility, you can then apply for a mortgage loan based on the program that best fits your particular needs.
New Century Mortgage can help you apply for your COE and assist you with your VA mortgage application. Here are a few VA loan programs that New Century Mortgage clients may be able to take advantage of:
Fixed Rate and Adjustable Rate Mortgages
Regardless of whether you are purchasing or refinancing, the VA offers both fixed rate and adjustable mortgage solutions to qualified borrowers1. In fact, borrowers may even qualify for a down payment waiver on a new purchase, provided that the sales price does not exceed the appraised value of the home3.
Furthermore, borrowers can also obtain seller’s credits which can be used to reduce your closing costs, effectively lowering or eliminating your out of pocket expenses.
An added benefit is that mortgage insurance (MI) isn’t required like many FHA programs and certain conventional loans3. There are also no prepayment penalties and surviving spouses can be eligible for VA benefits and home loans as well3.
1-4-unit dwellings, condos, manufactured homes, and newly constructed homes can qualify under this program3.
Interest Rate Reduction Refinance Loan (IRRRL)
An Interest Rate Reduction Refinance Loan is essentially the VA’s version of a streamlined refinance.
The goal of this program is to lower your monthly mortgage payment by effectively lowering your interest rate or helping you switch to a more stable monthly payment by converting an existing VA insured loan from an adjustable rate to a fixed rate product4.
Keep in mind that a VA funding fee may apply, but you can typically include these costs in the new loan amount meaning you won’t have to pay anything upfront4.
Have more questions about the VA’s mortgage loan programs? New Century Mortgage can answer all your VA related questions.
Give us a call at 850-775-0135 or email us at email@example.com
1 Veterans Benefits Administration, & Loan Guaranty Service. (n.d.). VA.gov: Veterans Affairs. Retrieved June 10, 2020, from https://www.benefits.va.gov/homeloans/
2 Closson, C. (n.d.). History of the VA Loan. Retrieved June 10, 2020, from https://www.military.com/money/va-loans/history-of-the-va-loan.html
3 Purchase loan. (n.d.). Retrieved June 10, 2020, from https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/
4 Interest rate reduction refinance loan. (n.d.). Retrieved June 10, 2020, from https://www.va.gov/housing-assistance/home-loans/loan-types/interest-rate-reduction-loan/