First Time Homebuyer Programs for Veterans
First time homebuyers may have saved for a down payment, but usually such savings are not sufficient to finance the additional costs involved with a home purchase. However, the U.S. Department of Veterans Affairs (VA) offers home loans to servicemembers and their families which are designed to help them finance homeownership.
VA’s home loans allow eligible military members, veterans and their surviving spouses to become homeowners. As part of its efforts to help servicemembers who are first-time homebuyers, VA provides home loan guaranty benefits and other homebuying programs to help with the purchase, construction, and repair of a potential home.
Private lenders (such as banks and other mortgage institutions) usually provide these VA loans. VA guarantees a part of the loan, which allows the lender to offer the homebuyer more reasonable terms. VA loans are easier to qualify for since they are government-backed and are available at competitive rates.
VA home loans are used to:
- Purchase a home or a condo unit within a VA-approved project
- Construct a home
- Buy and improve a home at the same time
- Make improvements such as installation of high energy-efficient features
- Obtain a manufactured property (home or lot)
Take a look into these VA loans to help you get started with your home purchase:
Purchase Loans
Under this program, VA offers home loans that enable you to buy a property at a competitive interest rate without the necessary downpayment or mortgage insurance.
VA’s Cash-Out Refinance Loan
This loan program is designed for homeowners who wish to get cash out of a home equity to pay debts, rehabilitate homes or fund school. The loan can also be used to convert a non-VA loan into a VA loan. VA will guarantee loans as much as 100% of your home value.
VA Home Loan Guaranty
Private lenders usually manage VA home loans, while VA seldom gets to be involve in the whole loan process. What VA does is guarantee a portion of your home loan acting as the “insurance” that you provide the lender.
Benefits of VA home loans
VA provides the guarantee to lenders, which enables them to provide you, the home loan borrower, more favorable terms and rates. These include:
- No required down payment given that the sales price doesn’t go over the value of the home appraisal.
- No required private mortgage insurance premiums.
- Seller may pay the closing costs.
- As a borrower, you cannot be charged a penalty fee if you pay off the loan early.
- VA can offer you assistance in case you can’t make due payments that are due.
While these home loans can benefit the first time homebuyer, take note that you don’t have to be one to be eligible for these loans and reuse the benefit. Plus, VA home loans are assumable, providing that the buyer assuming the loan is eligible.
Eligibility
To qualify for a VA-guaranteed home loan, you must be a servicemember or veteran, have a decent credit history, sufficient income and a validated Certificate of Eligibility (COE). It is required that the home you opt to purchase must be for your personal occupancy.
To get a COE, servicemembers and veterans must be discharged under reasonable conditions (except dishonorable discharges) and meet specific service requirements.
According to VA, other applicants that may qualify for home loans include:
- U.S. citizens who participated in the armed forces of a government that is allied with the United States during World War II.
- Individuals that served as servicemembers in certain organizations such as: Public Health Service officers, United States Military cadets, Air Force, or Coast Guard Academy, United States Naval Academy midshipmen, National Oceanic & Atmospheric Administration officers, World War II service merchant seaman, and others.
