What makes a VA Loan the way to go today? Quite simply: it’s the most resourceful home loan program available to veterans, service members, and military families in the United States right now. VA Loans are backed by government assurance, with significant benefits that provide veterans with homeownership options they would have otherwise not had.
To make them in-line with what our service members need, VA Loans come with no down payment or private mortgage insurance. Featuring competitive rates and terms, VA Loans enable veterans to purchase homes with little (or no) money out of pocket.
VA Loans have three signature benefits, including:
- No Down Payment – Service members are constantly on the move. They sacrifice normalcy to keep us safe. With a VA Loan, borrowers can finance 100-percent of the home’s value without putting a single cent down payment at the closing.
- No Private Mortgage Insurance (PMI) – In addition to no down payment, VA Loans ensure no PMI, which is usually required to protect lenders in case of a borrower default. Since VA Loans have the backing of the federal government, they assume of the risk on behalf of the borrower, enabling veterans to build equity in their house while saving thousands per year.
- Manageable Interest Rates – Interest rates, in the case of home buying, are based on the risk assumed by the bank to distribute the loan. Since VA Loans come with a government guaranty, financial institutions don’t have to deal with the normal risk associated with independent buyers. As a result, they can offer competitive interest rates that are up to 1% lower than typical conventional rates.
And the VA Loan benefits don’t just stop there. VA Loans are compatible with Basic Allowance for Housing (BAH), counting the BAH as effective income. Veterans can, therefore, use their BAH to pay off the monthly mortgage costs. Additionally, there’s no pre-payment penalty, which results from lenders missing out on additional opportunities to collect interest payments. Veterans can pay off their home loan at any point. They can then consider future home purchases and refinancing options in the future.