The U.S. Veterans Administration offers active-duty military personnel, veterans, and their families the opportunity to live out the American dream of homeownership via programs that make mortgages affordable and easy to obtain.
The VA Home Loan Program, used by millions of veterans since the program was established in the 1940s, involves lending and loan guarantees for veterans and their families to buy, build, or improve homes used as their primary residences.
Many people are familiar with the 20% down payment requirement often tied to conventional mortgages. Do you also need 20% down for a VA loan? Here’s what you need to know about your down payment obligations on VA loans.
VA Home Loan Basics
The Veterans Administration both lends money directly to borrowers and provides guarantees to lenders to do so. In both instances, the goal is to lower the cost of homeownership and allow more veterans and their families to acquire and enjoy their primary residences.
The VA offers four loan types:
- Direct purchase loan.
- Native American direct loan for Native American veterans.
- Interest rate reduction refinance loan.
- Cash-out refinance loan.
Depending on the circumstances, you may need to meet specific standards such as having a credit score of 640 or higher and paying for an appraisal on your home before purchase.
Down Payments on VA Loans
VA loans offer borrowers the opportunity to qualify without needing to come up with a 20% down payment. In fact, if you meet all requirements, you may be able to borrow money with no money down at all.
Your down payment will be set at zero if the sale price of your selected home is below the home’s appraised value. Professional appraisals are typically done by independent third-party experts and represent an estimate of what the home is worth based on its condition and comparisons to similar homes in the vicinity.
In some circumstances, it may still make sense to make a down payment on a VA home. Every case is different, but even a small down payment can allow you to build equity faster and lower the program fee assessed to cover administrative costs. Having flexibility on down payments is one of the main VA loan benefits.
Eligibility Requirements
Active-duty military personnel qualify for the VA Home Loan program after serving 90 continuous days. If you have left the service, your eligibility will depend on when you served. As a general statement, if you’ve served 90 total days during a period of war involving the U.S. military, you qualify. For those serving in peacetime, the general guideline is 180 total days. Some exceptions are made for circumstances where your service was cut short by injury or illness. Members of the National Guard and the reserves may also qualify.
At the Tuttle Group, our mission is to align your home loan with your long-term financial goals to help you achieve all your dreams. From paying for college to starting a business, your home loan should provide you flexibility. Many types of loans are available, and understanding mortgage options can be complicated.
Whether you’re a first-time homebuyer, looking to refinance, self-employed, military veteran, or public servant, The Tuttle Group is here to help. Call us or contact us online today to discuss your needs.
