Ideal Lending Solutions is a direct lender helping veterans enjoy the benefits of homeownership. We have VA Automatic Authority which allows us to quickly pre-approve and process home loans and refinances for our service men and women across the nation. VA home loans have flexible qualification guidelines and other features not available with other programs. Benefits include 100% financing, no down payment, no monthly mortgage insurance, and much more!
Buying or refinancing a home is a very important decision. Almost as important as selecting the right home is making sure you are selecting the right loan. There are distinct differences between VA and Conventional loans as well as potential advantages for buyers who qualify for a VA Loan.
Down Payment – VA Offers $0 Down
Conventional loans require a minimum down payment of 3% but in many cases, particularly in today’s market banks are asking for as much as 10-20% down. Down payments help to mitigate the bank’s risk should the loan go into default. Because a VA Loan is backed by the federal government, banks do not require a down payment making a VA Loan one of very few loan programs that can still offer 100% financing.
Monthly Payment – Possibly Save Big Every Month with VA
Because the loan is backed by the government, banks do not require PMI (private mortgage insurance), an added monthly expense required for conventional loans where the borrower finances more than 80% of the home’s value.
Lenders may offer a slightly lower interest rate to a VA borrower (typically 0.5%-1.0% reduction vs. conventional). Interest rates are based on the banks capital risk should the loan go into default, but because a VA Loan is backed by the government the bank takes less risk and is able to offer a lower interest rate to you. A lower rate combined with no PMI can substantially lower your monthly payment, which may mean more cash in your pocket every month.
Qualification Standards – VA may be More Lenient
The credit score and qualification standards for each loan type are very different. Once again, because the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA Loans making them easier to obtain especially in this market.
VA Loan Guarantee Fee may be Rolled into Financing
Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.
You do not have to pay the fee if you are a:
- Veteran receiving VA compensation for a service-connected disability, OR
- Veteran who would be entitled to receive compensation for a service-connected disability
if you did not receive retirement or active duty pay, OR
- Surviving spouse of a Veteran who died in service or from a service-connected disability
In 1944 the U.S. Department of Veterans Affairs began assisting Veterans in the goal of becoming homeowners. Since then, the VA has guaranteed tens of millions of home loans. The VA does not actually lend the money, rather the VA promises to repay a portion of the loan to the lender if the borrower defaults.
Purchasing a home is a big investment and decision. We’re here to guide you through the process. If you are a veteran or surviving spouse of a veteran you could qualify for a VA loan. You may be able to purchase a home with no down payment, with FICO scores accepted as low as 580.
Click here to view Frequently Asked Questions about VA Home Loans.
American Financial Network, Inc. is not acting on behalf of or at the direction of the federal government, and this offer is not being made by an agency of the government.