Five things Everyone Should Know About VA Home Loans

Many real estate experts know government Loans guaranteed by the VA as the best home loans available. Since their creation in 1944, these loans have helped more than 22 million Veterans become homeowners due to most current and former military members already meeting VA home loan requirements. Once an applicant meets said requirements, they get access to some great benefits and money-saving opportunities.

In the following, we will be going over five specific uses that everyone considering taking out a VA loan should know before deciding.

  1. No Money Down

This benefit speaks for itself, but to reiterate, once an applicant is deemed eligible for the VA loan, they will be able to take out a loan without paying anything upfront. The importance of not paying anything upfront is notable because a conventional home loan usually requires a down payment of 20%. This amount is even lower than the down payment required by other Government guaranteed home loans like the FHA’s 3.5% down payment requirement.

It is important to note that while you do not have to make a down payment, you still need to pay for the earnest money deposit, appraisal, and home inspection when buying a home with your VA benefit. It is also the most appealing out of all the benefits provided by this loan for many applicants, even with benefits like lower interest rates, lower monthly mortgages, and no mortgage insurance premiums.

  • Can Finance the Construction of a Property and the refinancing of a Property

Not only can VA loans be used for the purchase of a property. They can also finance the construction of a new property as well as refinancing of an existing property, each having its requirements.

  • Construction

Before using a VA home loan to finance a home’s construction through a VA construction loan, the applicant must meet a couple of requirements. The land must be prepped before construction can begin since the VA does not insure loans on vacant land.

  • Refinancing

The VA offers two loans to refinance a property. These come in the form of Interest Rate Reduction Loans (IRRRL) and a Cash-Out Refinancing loan. IRRRL loans allow the applicant to borrow up to 100% of their current loan amount for eligible applicants. On the other hand, cash-out refinancing loans enable applicants to cash out on home equity from a conventional or a VA home loan. These loans can then pay off debts, home improvements, or a financial emergency.

Many borrowers use a different loan to finance the property’s construction, and once the property is built, they use a VA refinance loan to enjoy the benefits offered by the VA. 

  • Adaptive Housing Grants

Veterans who have a service-related disability can also take out a VA Grant to adapt a home to meet their needs. Both of these have different disability requirements and offer different grant amounts for the adaptation of a home.

These two Grants are the Specially Adaptive Housing (SAH) Grant and the Special Home Adaption (SHA) Grant. Currently, the SAH Grant offers allowances of up to $90,364 for applicants who own or will own the property and meet its disability requirements. Applicants who qualify for the SHA Grant do not have to own the property they are trying to adapt. A family member can own it, and the grant can be up to $18,074 for eligible applicants.  

  • Benefits are Reusable

An aspect of VA loans that many people don’t know about is that it is reusable, and the VA currently has no limit as to how many times it can be used. People who meet the VA eligibility requirements have a certain amount of entitlement, which is a specific amount that the VA insures if the borrower defaults on their loan. This entitlement can also be used an unlimited amount of times as long as the applicant pays off their previous loan and make their entitlement back.     

  • Benefits Last a Lifetime

VA Loans were initially a reward for veterans returning home from the battlefields of World War 2. Since then, VA loans have evolved into a benefit for our brave men and women in uniform. Although it was not the case initially, VA loans after signing the Veteran’s Housing Benefits Improvement Act of 1970 have become a lifelong benefit. As a result, people who meet the VA’s eligibility requirements can enjoy those benefits for the rest of their life.

Phil Georgiades is the CLS of VA Home Loan Centers, a government-approved brokerage specializing in VA Home Loans. He has more than 22 years of experience working in VA home loans. To apply for a VA home loan, by calling (877) 432-5626.