VA loans are hotter than ever.
Over the last five years, service members and their families have flocked to the security and unmatched buying power of these government-backed loans. VA loan volume has soared 135 percent since 2006, jumping to 314,011 loans in 2010 from just 133,313 in 2007.
A tighter credit market and sagging housing industry have fueled renewed interest in this long-cherished program. VA loans feature more flexible credit and underwriting standards than conventional loans. Qualified borrowers can take advantage of no VA loan down payment requirements and no out-of-pocket costs.
At the same time, the many advantages of VA loans make them the safest lending option on the market.
That combination of purchasing power and protection is leading thousands of military members and their families explore the significant home lending benefits earned by their service.
In that spirit, here’s a brief look at some of the acceptable uses and incredible benefits of the VA Loan Guaranty Program.
The vast majority of military buyers use their VA loan to purchase or refinance an existing single-family home. But veterans interested in purchasing a condo or building a home from the ground up can also utilize a VA loan.
Here’s a look at some of the most common eligible uses for a VA loan:
These uses satisfy the needs of most military borrowers. But there are some limitations with VA loans. Borrowers can’t use them to purchase land or investment properties. The VA expects veterans to live in the home they purchase with a government-backed loan.
VA loans come with some significant benefits, which are geared toward helping those who served our country achieve the dream of homeownership.
The no-down payment requirement is the signature VA loan benefit. Nearly 90 percent of the VA loans issued last year came with no down payment. That’s even more important considering about 8 in 10 VA borrowers couldn’t have qualified for conventional financing.
Other major benefits of VA loans include:
VA loans do require a mandatory Funding Fee, which is about 2 percent of the loan amount. Borrowers can finance this fee into their loan, and it’s waived for those with service-connected disabilities.
For the vast majority of military borrowers, the VA loan program is the simplest and most cost-effective path to home ownership. You can learn more about the VA loan in our VA Loan Complete Guide.
Buying a condominium with you VA home loan benefit is a great option. However, there are additional requirements that differ from purchasing a single-family residence or a multiunit complex.
VA loans allow Veterans to have a co-borrower or co-signer on the loan. Here we break down co-borrower requirements and provide common scenarios around co-borrowing and joint VA loans.