VA home loans are something we deal with quite frequently as a Colorado mortgage broker. These are specific types of loans targeting certain homebuyers who might not be able to afford homes via conventional mortgages. But VA home loans are not available to just anyone. They are intended for military personnel and their families.
We put this post together to introduce readers to the basics of the VA home loan. If you are a new home buyer and think you might qualify, we would appreciate the opportunity to earn your business. A VA loan could be your ticket to home ownership. We would like to help you make it happen. Reach out by calling us at (303) 779-0591, applying through our loan application, or scheduling a free consultation.
Loans Backed by the VA
The first thing to know about VA loans is that they are backed by the U.S. Department of Veterans Affairs (VA). ‘Backed’ does not mean ‘funded by’. Rather, it simply means that the VA guarantees the mortgage from the lender’s perspective. The lender stands to lose very little because the VA will make good on the loan should the borrower default.
Also known as VA mortgages, VA home loans are underwritten and administered by mortgage lenders. You could apply for a loan through a Colorado mortgage broker or a retail bank. Approval would lead to funding by the bank or lender rather than the federal government. In other words, you still go through a mortgage broker or lender to get your loan.
How VA Loans Are Different
VA loans are pretty similar to conventional loans in terms of the application process and actual loan administration. But they also differ in several key areas. For example, only active-duty service members, veterans, and surviving spouses qualify for VA funding. The loans are targeted at a very small and specific audience.
Here are some of the other big differences between VA loans and conventional mortgages:
- Zero Down Payments – Conventional loans almost always require a down payment of at least 3-5%. VA loans come with no such requirement. They can be obtained with zero down payment.
- Credit Score & History – Conventional loans require at least a decent credit score and history to qualify. Although credit score and history do play into VA loan approval, the criteria for what constitutes a good credit score and history are more relaxed.
- PMI Requirements – Private mortgage insurance (PMI) is typically a requirement in conventional lending when a borrower doesn’t have a sufficient down payment. Veterans are not required to purchase PMI for a VA loan.
- Interest Rates – Interest rates on conventional loans are highly dependent on a borrower’s credit score and history. This is not the case with VA loans. In addition, VA loan interest rates remain competitive regardless of the economy.
It should be clear why VA home loans are so attractive to qualifying veterans and active-duty service members. A VA loan can mean the difference between being able to purchase a home and having to continue renting. If you think you qualify and are looking to buy, investigating VA home loans is well worth your while.
Making the Dream a Reality
Home ownership has long been a dream for many Americans. But since most of us do not have hordes of cash lying around, purchasing a home almost always requires getting a mortgage. The VA home loan program was originally started to help make the dream of home ownership a reality for service members and their spouses who could otherwise not afford to take out a mortgage. As a Colorado mortgage broker, we are honored to be able to help veterans and their spouses obtain competitive VA home loans.