The Secret Benefits of VA Loans You Should Know About

written by

Jim Mucci

posted on

November 26, 2024

Getting a VA loan as a veteran comes with amazing perks. You don't need to pay money upfront. The interest rates are low. You save a lot of money since you don't need extra insurance. If your credit score is not the best, that's okay. You can still get a loan with a score of 620 or even 580. Want to pay off your loan early? Go ahead – there are no extra fees. If you move, you can pass your low rate to the next buyer. Veterans hurt in service may not have to pay some fees at all. You can even fix up your new home with the same loan you use to buy it. VA loans help our veterans in so many ways.

No Private Mortgage Insurance Required

You don't need to pay for mortgage insurance with a VA loan. This is different from regular home loans, where you must buy insurance if you put less than 20% down.

Not paying for this insurance can save you a lot of money each month. Over time, these savings add up to thousands of dollars.

If you served in the military, you earned this money-saving benefit. Without paying for mortgage insurance, you can use your money for other things.

You might even be able to buy a bigger home. You also won't have to worry about asking the bank to remove insurance later, like other home buyers do.

Your savings start the day you buy your home.

Flexible Credit Score Guidelines

Getting a VA home loan is easier than other loans when it comes to your credit score. You need a score of 620 or higher.

But don't worry if your score is low. The VA knows life can be hard. They'll work with you even if you lost a home or went broke before. They just want to see that you pay your bills on time now.

If you don't have a credit score yet, that's OK too. You can show them you pay your rent and power bills to prove you're good with money.

Minimum Score Requirements

Getting a VA loan is easier than other home loans when it comes to credit scores. Many banks want you to have a score of 620 or more for regular loans.

But with VA loans, you can often get approved with a score of 580. Some banks might even say yes if your score is lower, as long as you pay your bills on time.

The VA doesn't tell banks what credit score you need. Each bank picks its own rules. This means you should talk to many banks to find the best deal.

If you worry about your credit score, remember that banks look at more than just that number. They also care about your job and if you pay your bills on time.

Score Recovery After Default

Life can be hard when you miss loan payments. But don't worry – you can still get a VA loan after you fix your credit. Most lenders want to see that you've been good with money for two years after missing payments or losing a home.

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During those two years, you need to show you can handle money well. This means:

Pay your bills on time
Lower the money you owe
Keep a steady job

VA lenders know that being in the military can make money tough sometimes. They're nicer about past money problems than other lenders. Regular banks might make you wait seven years, but VA lenders give you a second chance sooner.

Just tell them what went wrong with your old loan and how you fixed those problems.

Alternative Credit History Accepted

You can get a VA home loan even if you don't have a regular credit score. The VA knows that military life is different, and they want to help you buy a home.

Instead of just looking at credit scores, they'll check if you pay your bills on time. This means your rent, power bills, phone bills, and other monthly costs. If you pay these bills when they're due, it shows you're good with money.

Your lender will look at how you paid bills for the last year. They want to see at least three different bills you paid each month. This makes it much easier to get a loan, even if you don't have much credit history.

Lower Average Interest Rates

VA loans offer better rates than other home loans. This helps you save money each month.

Banks compete to give veterans good deals because the government backs these loans. You won't need to pay extra insurance like you'd with regular home loans.

When you pick a fixed rate, your payments stay the same every month. This means you won't have to worry about your payments going up later.

Market Competition Drives Rates

When you want to get a VA loan, many banks want to help you. They work hard to give you better loan rates than regular home loans. They know veterans and service members deserve good deals.

You can look at loans from many banks. Each bank wants you to pick them. This helps you get a better deal. Take time to talk to different banks about their VA loans.

The more banks you talk to, the more money you can save. Banks will try harder to win your trust when they know you're looking at other choices. This can save you a lot of money over time.

No Private Insurance Required

You won't need special insurance when you get a VA loan. This saves you lots of money over time.

In other loans, you need to pay for something called PMI if you put down less than 20% of the home price. But with VA loans, you don't need this at all – even if you put no money down!

You save money right away on your monthly bills. PMI costs a lot – up to hundreds of dollars each month.

VA loans do have one fee at the start, but you can add it to your loan amount. With other loans, you keep paying PMI every month until you own 20% of your home.

This makes VA loans much cheaper for our service members and veterans.

Fixed Rate Protection Available

Getting a VA loan often means paying less in interest than other home loans. Since the government backs these loans, lenders trust them more. This means you save money each month and over time.

You can lock in your rate with a VA loan. This means your monthly payment stays the same until you pay off your home. You won't have to guess what you'll pay next month or next year.

Your payment won't go up, even if other loan rates do. This helps you plan your money better and feel safe about your choice.

No Prepayment Penalties Ever

You can pay off your VA home loan early without any extra costs. Unlike other home loans, VA loans never charge you fees for paying ahead of time. This helps you save money.

Want to put more money toward your loan? Go for it! If you get extra cash from work or family, you can use it to pay down your loan faster. This means you'll pay less money over time.

You can also get a new VA loan with a better rate when you want. You won't have to pay any fees to close your old loan. This makes it easy to save money when loan rates go down.

Assumable Mortgage Options

Your VA home loan is special because you can pass it to someone else when you sell your home. They can take over your loan and keep your low interest rate.

This helps a lot when interest rates go up. If you got your loan when rates were low, new buyers will love to take over your loan. They don't need to be a veteran, but they must have good credit.

Be careful though. You need to make sure the bank says it's okay first.

Also, if the new buyer stops paying the loan, you might've to pay it unless you get special papers saying you're not responsible anymore.

Multiple Property Purchase Opportunities

Did you know you can buy more than one home with your VA loan? Yes, it's true! You can buy a new home even after you get your first one.

After you pay off your first home loan and sell the house, you can use your VA loan again. Some veterans can even have two VA home loans at the same time.

To buy another home, you must:

Have some VA loan money left to use
Plan to live in the new home
Meet VA rules each time

If your military job moves you to a new place, you can keep your first home. You can then buy a second home in your new area.

The best part? You can use your VA loan as many times as you want in your life. Just follow the rules each time, and you're good to go!

Refinancing Without Property Appraisal

Want to save money on your VA home loan? You can get a better rate without checking your home's value! This is called an IRRRL.

You don't need:

A home check
Credit check
Income proof
Job proof

The good news:

All costs can go into your new loan
You get your new loan faster
You pay less each month
You don't have to live in the home now
You can change from a moving rate to a fixed rate

This plan helps VA loan owners pay less each month. You just need to show how the new loan will help you save money.

That's it! It's a simple way to lower your monthly bills if you have a VA loan.

Native American Direct Loans

Looking to buy or build a home on tribal lands? The Native American Direct Loan can help. As a Native American veteran or tribal member, you can get a home loan with great rates. You won't need a down payment. You also won't need to pay for mortgage insurance.

To get this loan, you must:

Be a Native American veteran or tribal member
Live in the home you buy
Work with a tribe that partners with VA
Meet VA's rules for loans

This loan helps you get a better deal than most other home loans. You can use it to:

Buy a home
Build a home
Fix up a home

These loans only work for homes on federal trust lands.

Eligibility Requirements and Criteria

Want to buy, build, or fix up a home on tribal land? The Native American Direct Loan helps Native American Veterans and their spouses do just that.

To get this loan, you need:

A paper that shows you served in the military
Your tribe must work with the VA
Good credit and enough money coming in
A home that sits on tribal land
Your tribe must say it's OK for you to live there

Ready to start? Call your local VA loan office to see if you can get this loan. They'll help you with the next steps and check if you qualify.

Special Interest Rate Benefits

Getting a low, fixed interest rate is one of the best things about Native American Direct Loans. If you're a Native American veteran who lives on tribal land, you can get a better rate than most other loans.

The VA sets your rate, not banks. This means you can save money every month. Your rate stays the same the whole time you have the loan. This keeps you safe from bad lenders who might try to charge you too much.

To get these good rates, you need to show you served in the military. Your tribe also needs to have signed a special paper with the VA.

Energy Efficient Mortgage Programs

Want to make your home use less energy? The VA can help! If you're a veteran, you can get money to make your home better. You can get up to $6,000 to make changes that save energy.

You can use this money to:

Put in solar systems to heat and cool your home
Add better windows and doors that keep heat inside
Add covers to your water heater or get a new one that saves energy
Seal gaps around doors and windows
Fix your heating system to work better

The best part? You don't need to pay any money up front. You can add these fixes when you buy a new home or redo your loan. The money you save on power bills can help pay for these changes each month.

These changes will make your home:

More comfy to live in
Worth more money
Cost less to run

Joint VA Loan Benefits

When you want to buy a home with someone else using a VA loan, you have two choices.

You can team up with another veteran, or you can buy with your spouse or someone who isn't a veteran.

When two veterans buy together, you can mix your VA benefits.

This helps you buy a more costly home.

It also makes banks more likely to say yes to your loan.

Shared Financial Responsibility

When you buy a home with your spouse or trusted friend using a VA loan, you can make your case stronger. Two people working together means more money coming in. This can help you get a bigger home loan.

Working as a team means:

You split the monthly house payment
Your combined money helps you buy more house
Two credit scores can work better than one
Monthly bills are easier to handle together
You both own the home and build value in it

Having a partner makes buying a home easier. This is great when one person mightn't be able to get a loan alone.

Banks like it when two people apply together because they know the loan is safer.

Multiple Veteran Co-borrowing

When two veterans want to buy a home together, they can join their VA loan benefits. This means they can get a bigger home loan. Each person keeps their own VA loan rights, and both can use them at the same time.

The good news is that both veterans still get the same perks. They won't need money for a down payment. They can get good rates on their loan. And they can still get a loan even if their credit score isn't perfect.

Both veterans must live in the home they buy. They also need to prove they served in the military.

When they do this, they can team up and make their dream of owning a home come true.

Bankruptcy and Foreclosure Forgiveness

Getting back on your feet after money troubles won't stop you from using your VA home loan. The VA wants to help you start fresh after tough times.

After going through bankruptcy:

Wait 2 years if you'd Chapter 7
Wait 1 year if you'd Chapter 13

After losing a home:

Wait 2 years if the bank took your house
Wait 2 years if you'd to sell your house for less than you owed
Wait 2 years if you gave your house back to the bank

If you serve on active duty, you mightn't have to wait as long.

The VA knows life can be hard. You might face:

Problems from serving
Health issues
Job loss

They want to help you buy a home once you show you can handle money again.

Unlimited Loan Amount Possibilities

Getting a VA home loan lets you borrow as much money as you need. If you served in the military, this is great news! You can buy big, fancy homes if you want to.

The bank looks at how much money you make and if you pay your bills on time. They don't just stop at a certain dollar amount. If the bank thinks you can pay it back, they'll give you the loan.

Each area has its own rules about how much the VA will back up. If you want to buy a very costly home, you might need to put some money down.

But you can still use a VA loan to buy the whole house. You just mix your down payment with the VA part to get the home you want.

Disability-Related Fee Waivers

If you served and got hurt while serving, you can save money on your VA home loan.

You won't have to pay the VA funding fee, which helps a lot when buying a home.

You can skip the fee if:

You have a 10% or higher disability from your service
You got a Purple Heart
You're the spouse of someone who died serving
You get VA pay for injuries from serving

If you find out later that you have a service disability, you can get your money back.

This is true even if you already paid the fee.

These savings are here because you gave so much to our country.

The money you save can help make your new home more affordable.

Renovation Loan Options Available

Want to fix up your home? A VA renovation loan can help. This special loan lets you buy a house and pay for repairs all at once.

You can use the money to make your home better. Fix up your kitchen or bathroom. Put in a new AC system. Get a new roof. Make your home use less energy. You can borrow up to $50,000 for repairs.

You need to use workers the VA has checked and approved. The work must meet VA rules.

But you get good deals on these loans. You won't have to pay for extra insurance like other loans make you do.

With a VA renovation loan, you can turn an old house into the perfect home for you. It's a great way to get the house you want at a price you can afford.