Top 5 Things Every First-Time VA Loan Buyer Should Know

August 31, 2022

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Top 5 Things Every First-Time VA Loan Buyer Should Know

Our veterans have access to one of the best home loan programs available – the VA Loan.

The program is designed to help veterans, service members, and eligible surviving spouses purchase homes with favorable loan terms. VA Loans are available through private lenders, such as banks and mortgage companies, and they are guaranteed by the Department of Veterans Affairs. We work with tons of veterans, active-duty military, and their families on financing their homes here in the Lake Tahoe area, so we’ve put together a list of the top 5 things every first-time VA loan buyer should know:

1. You must be an active service member, Veteran, or surviving spouse of a Veteran to qualify for a VA loan

It's crucial to ensure you're eligible for a VA loan before you get too far into the home-buying process. You must be an active service member, Veteran, or surviving spouse of a Veteran to qualify for a VA loan. If you're unsure whether or not you qualify, you can check the eligibility requirements on the Department of Veterans Affairs website. Active-duty borrowers must have served at least 181 days during peacetime or 90 days during wartime. Military reserve or National Guard members with six years of service meet active-duty requirements.

Assuming you're eligible, the next thing you'll need to do is get a Certificate of Eligibility (COE) from the VA. The COE is proof to lenders that you are eligible for a VA loan - it will list the type of loan, your entitlement amount, and other important information, such as if you are 10% or more disabled (which waives the VA funding fee). You can apply for a COE online, through your lender, or at a VA regional loan center.

2. You may be eligible for a VA Loan even if you don’t have perfect credit

One of the biggest misconceptions about VA Loans is that you need perfect credit to qualify. While having a good credit score will certainly help the process along, you may still be eligible for a VA Loan even if your credit isn’t perfect. The minimum credit score for a VA Loan is 580, but lenders may require a higher score depending on their own internal guidelines. If your credit score is below 580, you may still be able to qualify for a VA Loan if you have adequate compensating factors, such as a steady income, low debt-to-income ratio, or a large down payment.

3. 100% financing is available

Another common misconception about VA Loans is that they require a down payment. While some lenders may require a down payment, it’s actually possible to finance 100% of the purchase price of your home with a VA Loan. If you do have to make a down payment, it can be as low as 3%, which is significantly lower than the 5%-20% (or more) required by most conventional loans.

4. You can use your VA Loan benefits more than once

What surprises many first-time VA Loan buyers is that you can use your VA Loan benefits more than once. So, don't fret about finding the perfect home or the perfect loan opportunity for this first home purchase. If you choose to purchase another property down the line, you may still be eligible for a VA Loan.

Of course, there are some restrictions. For example, you may need to sell your current home first if you currently have a VA Loan and want to purchase another property using your VA Loan benefits. However, this isn’t always the case, because if you have enough entitlement, you can actually have two VA loans at one time. Otherwise, you can refinance your VA loan into a conventional loan to use the maximum entitlement for another purchase.

Additionally, the new property must be for your primary residence — investment or vacation homes are not eligible. You may also need to occupy the new home within a certain time frame in order to qualify.

5. VA Loans have no pre-payment penalties

One of the most significant advantages of a VA Loan is that they have no pre-payment penalties. This means you can pay off your loan anytime without worrying about being penalized as long as you hold onto your loan for at least 7 months. So, if you come into some extra money or want to sell your home and pay off the loan, you can do so without worrying about any extra fees.

This major benefit can save you a lot of money in the long run. With other loans, such as conventional loans, you may be charged a pre-payment penalty if you pay off your loan early, adding up to a significant amount of money. So, the lack of pre-payment penalties with VA loans is a perk you should definitely keep in mind when choosing a loan.

Want more info on VA Loans?

If you're interested in learning more about VA Loans, or if you're ready to start the process of getting a VA Loan, we can help. We've helped thousands of veterans and military families get the home they deserve with a VA Loan, and we can do the same for you. Just call Maggie at (775) 260-1909 or submit a contact form so she can get in touch with you as soon as possible.

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