Your Guide to VA Loans: Eligibility, Benefits & Cost
NYFTY Lending offers flexible home financing options that are exclusively designed for veterans and their families. We’re proud to serve those who served and provide our nation’s heroes with mortgage terms tailored to them.
What Is a VA Loan?
A VA mortgage is a home loan program offered by the U.S. Department of Veterans Affairs (VA) to eligible veterans, active-duty service members, surviving spouses, and certain members of the National Guard and Reserves. VA loans have:
No down payment
VA home loans do not require a down payment, which helps ease the entry into homeownership for military families who may not have substantial savings.
Manageable closing costs
The VA limits loan origination fees, seller concessions, and closing costs to help make home ownership even more affordable for eligible individuals and their families.
No Private Mortgage Insurance (PMI) requirements
Although conventional loans with less than a 20% down payment require PMI, VA loans do not. This means more money goes towards the loan principal each month instead of paying for mortgage insurance.
What Can a VA Loan Be Used For?
Primary residences
Eligible borrowers must use their VA loan for a primary living space. This program cannot be used to finance a second home or investment property.
Refinancing a home
VA loans also offer opportunities for refinancing an existing mortgage with the Interest Rate Reduction Refinance Loan (IRRRL) or a cash-out refinance loan.
Making accessibility adaptations
Borrowers with service-connected disabilities can make accessibility upgrades to their primary home with the VA’s Home Improvements and Structural Alterations (HISA) program.
Pros
- $0 down payment
- Flexible eligibility criteria
- No PMI required
- No prepayment penalties
- Foreclosure assistance available
Cons
- Availability limited to veterans and eligible service members and surviving spouses
- A funding fee is required
- Properties must meet Minimum Property Requirements (MPRs)
- Cannot be used to buy second properties
Talk to our mortgage experts today about finding the right loan for you.
VA Loan Alternatives
- FHA loans are insured by the Federal Housing Administration
- They have flexible credit score requirements
- Minimum 3.5% down payment
- Requires initial and annual mortgage insurance premiums (MIPs)
- USDA loans are guaranteed by the U.S. Department of Agriculture
- They offer no down payment and 100% financing
- Borrowers must meet income and credit requirements
- The purchased property must be in a USDA-designated rural or suburban area
- Conventional loans are not secured by the United States government
- They offer competitive interest rates and flexible loan terms for qualified buyers
- Borrowers with less than 20% down may need Private Mortgage Insurance (PMI)
Is a VA Mortgage the Right Choice?
You belong to a military family
If you’re a veteran, an active-duty service member, an eligible surviving spouse, or a member of the National Guard and Reserves, VA loan benefits may be available to you.
You plan on buying a primary residence
VA loans can only be used to buy or refinance a primary residence that you live in full time. If you want to buy a vacation home or investment property, another loan may be a better fit.
You need flexibility for home repairs or accessibility modifications
The VA offers options like the Home Improvements and Structural Alterations (HISA) program, which helps veterans with service-connected disabilities make their homes more accessible.
When Is the Best Time to Use a VA Loan?
The best time to use a VA loan is when you’re eligible for the program and are buying or refinancing a primary dwelling. Using a VA loan can be especially advantageous for first-time homebuyers who may not have a large down payment or those who have service-connected disabilities and need to finance accessibility modifications along with the purchase of their home.
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FAQ
How do I apply for a VA loan?
To apply for a VA loan, you must first get a Certificate of Eligibility (COE). Then, you’ll need proof of military service for yourself or your spouse (usually a DD-214 or Statement of Service), proof of income, bank statements, credit history, and other required documentation.
Who qualifies for a VA loan?
- You are a Veteran of the United States Army, Navy, Air Force, Marines, or Coast Guard and
- Were discharged under conditions other than dishonorable
Or
- You are an active-duty service member with
- No less than 90 days of service in a row during wartime or
- No less than 181 days of service in a row during peacetime
Or
- You are a Reservist or National Guard member with
- At least 6 years of service or
- 90 days of service under Title 32 orders, 30 days of which must be consecutive
Or
- The spouse of a veteran who died in service or from a service-connected injury or
- The spouse of a veteran who is a prisoner of war or missing in action
What is the VA funding fee and how much will I pay?
The VA funding fee is a single charge that gets paid to the VA when you take out your loan. The amount is based on how much you borrow, if you have a down payment and how much, if you’re a veteran or active-duty service member, and whether it’s your first VA loan.
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