All qualified military members and veterans of the United States (US) armed services may avail of the Department of Veterans Affairs (VA) Home Loan programs. VA-backed loan programs can help military members, veterans, and their families to create, refurnish, and renovate a house.
Choosing A Loan Program
The VA home program for military members and veterans doesn’t exempt them from the requirement of providing proof of income and the required credit score to avail of a loan. What it does, though, is they can get better conditions compared with what they could with a traditional lending system from a mortgage firm, bank, or federal credit union. Here are the available programs:
VA Home Loan Program
The VA home loan program is already more than 75 years old, and it can be availed of to buy, to build, or to refinance a home. It can be taken by almost all service members and veterans as long as they’re not disqualified. It can save the borrowers tens of thousands of dollars compared with home loans from commercial banks.
One of the biggest advantages of the VA home loan program is you don’t have to make an initial payment when you buy a home as long as your loan doesn’t exceed the loan limits. But even the advantage has been expanded further by a new law removing any limits for any veterans who are eligible for the full VA loan entitlement.
In 2019, the Blue Water Navy Vietnam Veterans Act was passed into law, removing the loan limit maximums previously imposed on veterans in some parts of the country.
Before the Blue Water Navy Law, borrowers were able to get higher loan amounts. But because of the bounds on the amount the VA could guarantee, the borrowers who exceeded the limits were required to make a down payment equivalent to 25% of the portion of the loan which represented the excess of the sales price from the maximum availability.
Different VA Loan Types
Various VA loan types are being offered to eligible military members and veterans. Here are some of them:
Purchase Loan
A purchase loan is a VA-backed loan helping a military member or veteran looking to purchase a loan and to get terms better than those being offered by any private-lending loan.
Interest Rate Reduction Refinance Loan (IRRRL)
If you have an existing VA loan, you can avail of the Interest Rate Reduction Refinance Loan (IRRRL). This loan program can help you decrease your payments through a change in the interest rate structure of your VA-backed loan or by getting a refinance of your current home mortgage loan.
Native American Direct Loan (NADL) Program
The Native American Direct Loan (NADL) program is offered to Native Americans who are eligible military members or veterans of the US armed services. They can take a loan under the program to have a home on federal land.
Cash-out Refinance Loan
If you’re a military member or a veteran and you’ve already paid a significant sum of money on your home loan, you can avail of the cash-out refinance loan program out of the equity from your VA-backed loan. Most borrowers use this to pay debts, school tuition fees, or to make further home improvements.
State-based Home Loan Programs
Aside from the VA Home Loan Programs, several American states are also offering home-loan programs to both current and former service members of the US armed forces.
Eligibility rules differ from one state to another, and the requirements sometimes differ, too. Most state programs include limits on income and prices of property. Some states also impose other requirements which have nothing to do with military service.
There are state-based veteran housing benefits in the following states:
- Alaska, California, Nevada, New York, Texas, Washington
- Indiana, Maryland, Massachusetts, Mississippi, Oregon, Wisconsin
- Missouri, Nebraska, Ohio, Tennessee, Utah
- Georgia, Florida, North Carolina, Pennsylvania
Even surviving spouses can avail of a VA home loan program. A new law has extended the VA loan eligibility to the surviving spouses of military members and veterans of the US armed services.
The Honoring America’s Veterans and Caring for Camp Lejeune Families Act (H.R. 1627) has made the widows and surviving spouses of military members and veterans, eligible for VA direct and VA-backed home loans. The new law qualifies the surviving spouse as long as the veteran was rated disabled and eligible for compensation before dying. The death can be of whatever cause.
VA Program For Homeless Veterans
The VA also has a separate program for veterans who are homeless or who are at imminent risk of homelessness. If you know a homeless veteran or already at imminent risk of becoming homeless, you can tell them to contact the National Call Center for Homeless Veterans for assistance. They have a toll-free number (877) 4AID-VET (877-424-3838). In this way, they can be properly accommodated and taken care of.
Eligibility Requirements
To be eligible for the VA Home Loan programs, borrowers must meet the following requirements:
- Certificate of Eligibility (COE)
- Credit Score which qualifies for a home loan. Military members and veterans don’t need to have a perfect credit score. Borrowers who had credit scores of somewhere between 680, 700, and 720, were able to get VA loans and VA-backed loans with substantially lower interest rates. On average, VA borrowers obtain a credit score above 700. This is higher than those of most average civilian borrowers.
- There are different service requirements, depending on the service branch of the borrower, the years in active-duty service, years in service including those in the Reserves or National Guard, and days of active service during peacetime.
Housing The Heroes
The VA Home Loan program was designed to help military members and veterans of the US armed services get a home loan. The programs are intended to make it as easy as possible for all qualified military members and veterans to get an affordable home mortgage loan. Some of its most advantageous features include no down payment, low interest rates, and low monthly payments.