VA loans offer a host of huge benefits, from $0 down payment and no mortgage insurance to limits on what buyers can pay in closing costs.
It’s part of a benefit program that’s helped millions of veterans and military members purchase a home since World War II.
But this is also a specialized mortgage option with some unique requirements: VA loans may not be the right fit for every military buyer.
Here’s a look at four signs you’re a good candidate:
1. You’re eligible
Veterans and active military need to meet certain service requirements in order to be eligible for a VA-backed mortgage. The VA ultimately determines who has access to this program, but in most cases, buyers are eligible if they meet the following service conditions:
At least 90 consecutive days active duty during wartime
At least 181 consecutive days active duty during peace time
At least six years in the National Guard or Reserves
Some surviving spouses of service members and veterans may able have home loan eligibility.
These are broad guidelines, and there can be exceptions. You don’t need to be certain of your eligibility to start the VA loan process. Lenders will often work to establish your eligibility on your behalf.
2. You want to put $0 down
The signature benefit of VA loans is being able to purchase without a down payment.
Conventional loans usually require at least 5% down, while FHA lenders want at a minimum 3.5%. On a $250,000 loan, that’s nearly $13,000 and $9,000, respectively. It can take veterans years to save that kind of lump sum.
Beyond that, conventional and FHA buyers who can’t put down 20% will have to pay for mortgage insurance each month. VA loans don’t come with any kind of mortgage insurance.
3. You’re buying a primary residence
This program focuses on getting veterans and military members into homes they’ll live in full time. You can’t use a VA loan to purchase a vacation home or an investment property you won’t live in as your primary residence.
But you can purchase condos and even multiunit properties, provided you live in one of the units. You’ll also need to meet VA occupancy requirements, which typically means living in the home as your full-time residence within two months of closing. Your spouse may be able to fulfill this requirement in some cases.
4. You’re not seeking a fixer-upper
The VA wants veterans buying homes that are safe and structurally sound. To that end, properties need to satisfy a set of conditions the VA calls minimum property requirements.
Generally, VA buyers can pay to make repairs on a home in order to get to closing. But that’s not always a smart financial decision, and some fixer-upper properties may present a significant challenge for the VA appraisal process.
Veterans United. "4 Signs You’re a Great VA Loan Candidate." Realtor.com. Veterans United. 19 November 2014. https://www.realtor.com/advice/4-signs-great-va-loan-candidate/?guide_ref=223057