Buying your first home can be intimidating. Not only is it one of the biggest financial commitments of your life, navigating the process can be confusing. If you’re a veteran, there’s good news. You’re entitled to VA loan benefits that can help make buying your first home much more manageable.
1. You can buy a home sooner.
Thanks to the past decade’s economy, the average age of a first-time home buyer has increased to 32. Young people are renting longer as they try to balance saving for a down payment with paying student loans and other bills while wages remain stagnant. While there are programs out there that only require a 3.5 percent down payment, they often come with private mortgage insurance or other fees. That all changes if you’re a veteran. VA loans don’t require a down payment and don’t have private mortgage insurance mandates for borrowers. So while other people your age are struggling to save for their down payment, you’re able to take the plunge into home ownership whenever you feel comfortable.
2. Your credit score doesn’t need to be high
It can be hard for anyone to build good credit, but it can be even more difficult for a young service member—especially if you’ve spend a lot of time serving abroad. The good news is VA loans only require a score of 620 to approve your loan. Sure, that’s comparable to some conventional loans and FHA loans. But when you use a VA loan, your 620 credit score doesn’t come with any additional fees or down payment requirements. To compare, an FHA loan requires a 580 credit score with a 3.5 percent down payment. If your score is lower than that, you’ll need to put 10 percent down.
3. You have support
The name VA loan can be a little misleading for some. While the loans aren’t administered by the Veterans Administration, they are backed by the government. That means lenders have a guarantee that not too many veterans are going to default on their VA loans. One way the VA supports that guarantee is by offering free mortgage counselors to any borrower who is having trouble making their payments. The counselors can help you figure out what you can pay and then work directly with your lender to negotiate a way for you to continue making payments. That might be repayment plan, forbearance, or a loan modification—anything that will keep you in your home and on your feet.
4. You can start the process while you’re deployed
You don’t have to be in the country to buy your dream home. Many service members choose to use their benefits to buy a home for their families while they’re deployed. Most of the time their spouse handles the day-to-day management of buying the home, but you can also give a friend or family member a limited Power of Attorney to handle this for you if you’re single.
5. You can use it multiple times
Not everyone buys their dream home right out of the gate. Many people choose to go with a smaller, less expensive “starter home” in order to save money and start to build up their savings. Then, when they’re in a better position financially, they buy their dream home. You don’t have to save your VA loan benefits until you’re ready for that four-bedroom in the suburbs or the spacious loft close to night life. You can use it multiple times, so that means you can get all the same benefits for your starter home as you would for your dream home. So, be sure to explore your VA loan benefits if you’re thinking of buying your first home, your dream home, or anything in between.
Guest Author: Kylee Della Volpe is a writer and editor for mortgages.com.
Post Author: Joshua Jarvis
Joshua Jarvis is the owner and founder of Jarvis Team Realty. Joshua is a follower of Jesus, husband and father. Joshua loves technology and helping connect others. An Atlanta native and a graduate of Georgia Tech, Joshua is often called a "homer" because he's all about local Atlanta teams and loves the diversity that is the calling card of the "ATL."