VA Home Loans in Florida

VA home loans are government-backed loans that come with unique financial benefits not present in conventional loan programs. Here’s everything you ought to know about VA loans, from eligibility to its key advantages.

What Exactly is a VA loan?

VA loans are private-issued mortgage loans that the U.S. Department of Veterans Affairs accepts liability for, hence easily obtainable. These loans became available in 1944 as part of the GI Bill but have only gotten popular in recent years.

VA Loan Eligibility Requirements

You must meet the following requirements to qualify for VA-backed home loans.

• You’re currently serving or are a veteran who received an honorable discharge and had attained the minimum service expectations.
• You served about 90 consecutive days in war or 181 straight days during a peaceful period.
• You’re a spouse of a military member who died in the line of duty
• You have served for at least six years in the National Guard or Selected Reserve

Understanding VA Entitlements

Entitlements are an essential element of the VA loan program. Entitlement is the amount that the government will be liable for if you happen to default. Two forms of VA entitlement exist.

• Basic - The limit for this entitlement is $36,000 for loans below $144,000 or 25% for loans that stand at this figure or more.

• Bonus - This entitlement type allows you to receive up to 25% of the Federal Housing Finance Agency (FHFA) loan limit, minus the basic entitlement. For Florida, the FHFA conforming loan limit for 2021 is $548,250.

Significant Benefits of the VA Loan Program

Below are the key advantages of receiving a VA home loan in Florida.

1.  No need to pay a down payment

This is by far the most significant benefit of receiving a VA home loan. Not paying a down payment means veterans and other qualifying groups don’t have to spend their entire adult life saving for the required lump-sum amount.

Generally, the down payment for an FHA loan is 3.5% and 5% for conventional loans. A military member would need to raise either $8,700 or $12,500 respectively for a loan of $250,000. Raising such amounts and building credit can be complex, especially for service members who are constantly on the move.

2.  You don’t require private mortgage insurance (PMI)

For private lenders, private mortgage insurance helps to protect them when a borrower fails to pay their loan. This means that a borrower has to either make monthly PMI payments or pay about 20%. Thankfully, with a VA loan, the government covers this insurance. As a result, veterans get to save thousands throughout their home loans. For instance, for a loan of $150,000, you get to save $115 every month.

3.  Low interest rates

The low interest rates are yet another way VA loans help veterans save money. According to the Origination Insight Report by ICE Mortgage Technology, the 30-year rate for VA loans continues to be the lowest, currently at 2.60%, compared to conventional loans interest rates, which stand at 2.92%.

4.  Flexible credit requirements

The Department of Veteran Affairs sorely acts as a guarantor. Therefore, they don’t lay specific credit score requirements. VA lenders, on the other hand, have benchmarks to determine a borrower’s level of risk.

The good news is that while credit score requirements are applicable, these cutoffs are lower compared to other loan programs. Moreover, VA loans are much more forgiving if you’re struggling financially.

5.  Better closing costs limits

VA loans protect veterans from paying expensive closing costs. Borrowers can request home sellers to cover up to 4% in concessions for various expenses like insurance and judgments.

6.  Lifetime benefits

VA loan benefits don’t expire. Unfortunately, many veterans are unaware of this feature and believe that the program offers a one-time use. Once you qualify for this loan, you may utilize this program again and again.

What’s more, you don’t need to clear your existing loan to qualify for another. Plus, you may even be eligible for various loans at ago if you’ve received a second-tier entitlement.

7.  No penalties for repayment before loan maturity

Most conventional loans penalize borrowers for repaying their loans before maturity. This is because lenders can no longer get their money with their desired interest rates. Therefore the penalty serves as a method to recover some of that amount. With VA home loans, veterans need not worry about fines and may prepay at any point.

8.  Safety from foreclosure

VA loans are one of the safest mortgage options available. This program works to ensure veterans can buy homes and also keep them.

9.  Appraisal services

The VA loan program offers appraisal services for veteran borrowers. This evaluation is a safety net that ensures borrowers purchase homes at “fair market value.”

10.  Accepts various forms of income

Typically, loan repayments tend to come from salaries, housing, and retirement pay. However, with the VA loan, you could choose to make payments using other income like your subsistence allowances and overseas pay.

Final Note

If you are a veteran looking to own a home, it would be wise to take advantage of the VA home loan program. These loans are easily accessible because of their relaxed requirements. Plus, unlike conventional loans, you don’t need to put down any money, have PMI coverage, or be afraid of penalties. That’s not all; VA loans are a lifetime benefit. We recommend researching lenders with the lowest rates and flexible guidelines to secure the best deal. Owning a home should no longer be a pipe dream; apply for the VA loan program today!