Types of VA Home Loans
As a veteran, you have access to some very well-deserved perks. There are dining discounts at restaurants, ticket promos at the movie theater, and did you know you can even get a discounted car lease at BMW? Even so, the benefits that come along with VA home loans just might beat all the others. With a VA home loan, you get expedited service, minimal closing costs, and some of the best loan options out there.
So, what homeownership options await a vet like you? We’ll cover the top four types of VA home loans – soup to nuts. Plus, we’ll dig into how to qualify.
First things first though, what exactly is a VA home loan?
VA home loans – the basics
If you get a VA loan, you’ll probably get it the same way most people do. A mortgage broker or a bank will help you. But, there’s one big thing that makes VA loans special – The US Department of Veteran Affairs guarantee. This guarantee means the government will cover part of the loan if a borrower can’t make their payments anymore (when the loan ends up in foreclosure.)
That promise from the government reduces the risk to the mortgage lender. So, if you qualify for a VA home loan, you get some of the most competitive rates out there. And, you get a simplified application process. You deserve it.
Different types of VA home loans
Looking to buy a home? Or, are you ready to lower your monthly payment? How about investing some of that home equity into a kitchen remodel? The VA has you covered. These 4 mortgage types carry the VA guarantee, so you get the veteran benefits when you use one.
- VA Purchase Mortgage – This loan is for – you guessed it – buying a house. It gives qualified borrowers those competitive VA interest rates, without a down payment and without private mortgage insurance (PMI).
- Interest Rate Reduction Refinance Loan (IRRRL) – You might also hear this referred to as VA streamline refinance. If you already have a VA home loan, you can use this refi to lower your interest rate or change your adjustable rate mortgage to a fixed rate mortgage. So many names, so many benefits.
- VA Cash-Out Refinance – Want to turn some of your home equity into cash? The VA cash-out refi could be just your loan. You’ll get cash and your new VA loan will start over. And, yup. You guessed it. You’ll get all those VA loan perks, too.*
- Native American Direct Loan (NADL) – Qualifying Native American veterans can use this loan to buy, build, improve, or refinance a home on federal trust land. The best part? Closing costs are low, rates are competitive, and you don’t need a down payment.
VA loan terms to know
- Home equity – The current dollar value of your home, minus the amount owed on your home loan.
- Interest rate – The amount you’ll pay to borrow money from a lender. The cost to borrow is shown as a percentage on top of your home loan amount.
- Adjustable rate mortgage – A mortgage loan with an interest rate that may go up and down over the life of the loan.
- Fixed rate mortgage – A mortgage loan with an interest rate that stays the same for the life of the loan.
- Closing costs – Fees and other charges, on top of your home loan amount. These are usually due on closing day, but can often be rolled into your monthly payment.
- Private mortgage insurance (PMI) – The extra fee for borrowers with less than 20% of the loan value to invest up-front. VA loans don’t require PMI.
What types of homes qualify for VA loans?
I can tell you’re excited about VA loan possibilities – and we are, too. But what types of homes qualify for VA loans?
Qualifying home types
Single family homes – Of course. Individual houses are the main VA loan attraction.
Condos/townhomes – If the condominium complex is VA approved, you’re good to go. But, even if it’s not on the approved list, your lender can request approval from the VA.
Modular homes – If the modular home is attached to the foundation, it should be covered by a VA loan.
Mobile homes – Mobile homes (also called manufactured homes) are eligible for VA loans. Just check with your mortgage professional to see if they lend for mobile homes.
New construction – Yes, you can buy a newly built home with a VA loan, but it can be tricky. The lender will need build plans and the building site must be VA approved. On top of that, three different inspections are required.
The VA says, “nope”
Vacant land – The VA doesn’t guarantee loans on vacant land. Darnit.
Co-ops – Cooperative housing projects aren’t currently covered by the VA. This is because you’re not actually buying real estate, but just a share of the property.
Perk up your home purchase with a VA loan
Ready to benefit from those VA home loan… well… benefits? With competitive interest rates, limited closing costs, and no need for a down payment, your finances could benefit big time. And let’s be honest. You totally deserve it.
Reach out today to see if you qualify for that VA loan and to get a mortgage estimate.
*Using your home equity to pay off debts or make other purchases does not eliminate the debt or the cost of the purchases, but rather increases the loan amount of your mortgage to be paid according to your new mortgage terms.
Looking to buy a home? Or, are you ready to lower your monthly payment? How about investing some of that home equity in a kitchen remodel?* The VA and Cardinal Financial have you covered.