(May 30, 2023)
VA benefits revolve around education & training, health care, civil employment, and housing assistance, among many others.
VA loans are among the most popular benefits available to Veterans, Service Members, and select dependents. They allow you to buy property anywhere in the country with no down payment required, smoothing out your path to becoming a homeowner.
Whether on active duty or retired, a VA loan allows you to purchase or build your dream home in Miami-Dade or anywhere in the country, even with less favorable credit.
Learn how to take advantage of this zero-down payment mortgage and become a homeowner today.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Miami-Dade County, Florida.
What is a VA Loan?
A VA loan is a government-backed mortgage designed to assist active military personnel, Veterans, and their eligible surviving family members to become homeowners.
This home loan has been around since 1944, helping millions of Veterans, active military personnel, and their dependents purchase homes. It is available to eligible applicants through the U.S. Department of Veterans Affairs but provided by banks, credit unions, mortgage companies, and accredited private lenders.
Unlike traditional mortgages, VA loans have no down payment and private mortgage insurance requirements, providing a lifeline for Veterans and active military personnel to get home financing.
The federal government guarantees all VA home loans, allowing lenders to offer more favorable terms and making it more affordable for borrowers.
Besides, the loans have competitive interest rates and lower credit score requirements than conventional home loans, making them the ideal housing assistance program for Veterans and active service members.
With up to 100% financing, you can use your zero down payment VA loan to purchase, build, repair, renovate, refinance, retain, or adapt a property for your housing needs.
The best part is that a VA loan is a lifetime benefit, meaning you can use it multiple times to acquire another home once you repay the original loan in full.
How Do VA Loans Work?
A VA loan is no ordinary mortgage, and understanding how it works can help you decide if it is the right home financing option for you. This zero-down payment mortgage is exclusive to Veterans, active-duty military members, and their eligible spouses or family members.
It is government-insured, and the VA department sets the eligibility requirements and mortgage terms. However, private lenders offer the actual financing, meaning you can only apply for the loan via accredited banks, credit unions, and mortgage companies.
Since a VA loan does not have a down payment, the government has to guarantee the loan through the VA department. By law, the VA promises to reimburse the lender a specific mortgage loan percentage if you default or in case of foreclosure.
When applying for the loan, you must provide the lender with a Certificate of Eligibility issued by the VA. The CoE proves your military service history and confirms that you meet the minimum active-duty service requirements for VA loan eligibility.
However, you must also meet the lender's underwriting requirements to receive financing, but the VA loan guaranty agreement means most lenders are often willing to ease their terms.
Unlike traditional mortgages, VA loans do not require private mortgage insurance (PMI), and you don't have to pay mortgage insurance premiums.
Eligible borrowers, who have never used their home loan benefits and thus have full VA entitlement, have no limits on mortgages over $144,000, meaning you can apply for any loan amount without restrictions.
However, the lender may determine the amount you can borrow based on your income, credit history, and assets.
Even though VA loans do not require a down payment or mortgage insurance, you might pay a funding fee, ranging from 0.5% to 3.6% of the loan amount, at closing.
The VA funding fee is a one-time payment that helps run the VA loan program and offset the burden on taxpayers. The good news is that you can finance the funding fee into the loan, so you don't have to pay it from your pocket.
The VA exempts applicants receiving VA compensation for service-related disabilities and surviving dependents receiving Dependency and Indemnity Compensation from paying funding fees.
Total closing costs cannot exceed 1% of the loan amount, and the buyer, seller, lender, or any other third party may pay or waive these costs.
Types of VA Home Loans
There are FOUR main types of VA loans:
VA Home Purchase Loan
The VA purchase loan is a zero-down payment financing exclusive to veterans and service members to buy new or existing homes. You can use a VA purchase loan to acquire a single-family home, condo, manufactured home, or duplex house. You can also use the loan proceeds to construct a home.
Native American Direct Loan (NADL)
The Native American Direct Loan is a home financing program for Native American Veterans. Eligible borrowers can use the funds to purchase, construct, renovate, or refinance a home on federal trust land.
Interest Rate Reduction Refinance Loan (IRRRL)
Interest Rate Reduction Refinance Loan is a refinancing option available to borrowers who already have a VA loan on a property. It helps borrowers renegotiate and lower the interest rates of the existing loan to reduce monthly payments.
Cash-Out Refinance Loan
Cash-Out Refinance Loan is a VA credit option that allows borrowers to refinance an existing loan and take out some cash from the property's equity to pay off debt or manage everyday expenses.
VA Loan Eligibility
VA loans have the most flexible eligibility requirements, making them easier to qualify than traditional mortgages.
However, this loan is only available to Veterans, active military members, and their surviving dependents.
Here are the minimum eligibility requirements for VA loans:
-
90 continuous days of active service for current service members
-
181 days of active duty or 24 continuous months for Veterans
-
Six credible years for Reserve and National Guard service members
-
Discharged with an honorable discharge
-
Un-remarried surviving spouse of a veteran who died in active service or from a service-connected disability
- Spouse of an MIA or POW service member
Applying for a VA Loan
Applying for a VA loan starts with requesting a Certificate of Eligibility (CoE) through a VA-approved lender, the VA's online benefits portal, or via mail by filling a VA 26-1880 form.
The VA department is responsible for confirming your eligibility before issuing a CoE, which confirms to the lender that you meet all the minimum requirements and are eligible for a VA loan.
You can get a VA loan through a bank, credit union, or mortgage company. However, each lender has terms you must fulfill before securing the loan. You must also shop for a VA-approved home to get financing for the purchase.
Once you meet all the requirements and pay associated fees, the lender will disburse funds to the seller to complete the purchase.
VA Loan Pros
No Down Payment
Most traditional mortgages require borrowers to place a down payment, ranging from 3% to 20% or even more at closing, before securing a loan. Saving the required amount can be impractical and time-consuming, making it increasingly challenging to secure home financing.
In contrast, VA loans are among the few home financing options with zero down payment. The federal government guarantees the loan, so you don't have to pay a down payment.
No Mortgage Insurance
Lenders usually require borrowers to pay Private Mortgage Insurance (PMI) on loans with a down payment of less than 20% of the mortgage amount to guard against defaults. FHA loans require borrowers to self-insure home loans by paying a Mortgage Insurance Premium (MIP).
VA loans do not require Private Mortgage Insurance or Mortgage Insurance Premiums since they are already government-insured.
No Loan Limits
VA loans have no limits for selected eligible borrowers. If you have full VA entitlement, meaning you haven't used your home benefits or fully paid a previous VA loan, you can borrow any loan amount without restrictions.
However, the lender will determine how much you can borrow based on your current income, assets, or credit history.
Competitive Interest Rates
VA loans are specialized loans with some of the most competitive interest rates on the market. The rates are comparatively lower, if not the lowest, allowing you to get home financing without requiring high credit scores.
They also allow higher debt-to-income ratios exceeding 41%, meaning you can secure VA financing even if your finances are not favorable.
Flexible Eligibility Requirements
The flexible eligibility requirements make qualifying for a VA loan a breeze. After all, the essence of VA loans is to ensure Veterans and active-duty members enjoy the benefits of serving their country.
You don't need to struggle to qualify for VA financing as long as you've served for 90 continuous days or have an honorable discharge.
Limited Closing Costs
VA loans have fewer closing costs than any other home loan program. The lender cannot charge borrowers a fee exceeding 1% of the total loan amount in closing costs.
Besides, anyone, including the seller, buyer, or lender, can pay the closing costs as negotiated in the sale agreement. The lender might even decide to waive the closing costs altogether, especially if you're a Veteran receiving or eligible to receive VA compensation for a service-related disability.
No Prepayment Penalty
A prepayment penalty is a fine that lenders charge borrowers for paying off their loans partially (more than the allowed periodic payment) or thoroughly ahead of schedule. If you pay off your loan sooner than scheduled, the lender won't collect the projected interest, resulting in unexpected losses.
Fortunately, VA loans do not have prepayment penalties, allowing you to clear your loan as early as you wish.
Lifetime Benefit
A VA loan is a lifetime benefit for eligible active service members and Veterans. You can reuse your VA loan benefit multiple times to restore your full entitlement as long as you have cleared the original loan and met the minimum occupancy requirements.
It is even possible to service more than one VA loan simultaneously, which is handy if you want to upgrade to a bigger and better home.
Multiple Refinance Options
Another reason to choose a VA loan is that it has multiple refinance options, including the VA Interest Rate Reduction Refinance Loan and the VA Cash-Out Refinance.
The refinance options help reduce your interest rates, lowering your monthly payments. They also allow you to take out some cash, up to 90%, from your home's equity.
Foreclosure Avoidance Programs
The VA partners with lenders to assist borrowers in making sound financial decisions and avoid defaulting or falling behind on mortgage payments by offering various foreclosure avoidance programs.
These programs provide foreclosure avoidance options, such as loan modification, short sale, new repayment plans, and forbearance, ensuring you don't lose your home.
VA Loan Cons
VA Funding Fee
Even though VA loans do not require a down payment or private mortgage insurance, you still have to pay a funding fee as a mandatory requirement. The funding fee ranges from 0.5% to 3.6%, increasing each time you reuse your VA loan benefit.
Nevertheless, most people don't consider the VA funding fee a disadvantage since it helps fund the loan program for future generations while easing taxpayers' costs. Borrowers with service-related disabilities or surviving dependents are exempt from paying a funding fee.
For Primary Homes Only
VA loans are limited to primary residences, and you cannot use the funds to finance a second home or investment property. You must agree to live in the house permanently as your primary residence to benefit from this loan.
Reluctant Home Sellers
Housing markets are usually highly competitive, especially in prime areas, with sellers receiving multiple offers from potential buyers. For this reason, some sellers may be reluctant to sell their homes to VA buyers if they receive higher bids from other potential buyers.
The Top Things to Do In Miami-Dade County, Florida
You'll never go wrong with buying a home in Miami-Dade with a VA loan. Miami-Dade is one of the most culturally diverse counties in Florida and the entire country, with plenty of options to suit your housing needs.
It is home to one of the country's largest veteran communities, making it the ideal place to call home for retired and active-duty military personnel.
The county's warm, sub-tropical climate throughout the year makes it an excellent destination for outdoor activities.
With that said, here are the top 5 things to do in Miami-Dade:
Visit the Vizcaya Museum and Gardens
The Vizcaya Museum combines art, architecture, and history with nature, making it the ultimate destination for art enthusiasts, nature lovers, and historians. This Italian Renaissance-style building hosts one of the largest collections of European antiques, collectibles, and decorative works from the 16th century. It also has several landscaped gardens with pools, fountains, and open spaces for a tranquil rest after a long day strolling through the villa.
Enjoy Engaging Animal Shows at Jungle Island
A visit to Jungle Island is a must for bird and animal lovers and nature enthusiasts. This zoological park is a landmark attraction thanks to its breathtaking flora and fauna comprising several streams, waterfalls, and tropical trees. It hosts interactive exhibits and engaging animal shows throughout the day, with free admission for Veterans and active military personnel.
Sunbathe at Miami's Top Beaches
Sunscreen traces its roots in Miami-Dade, which explains why sunbathing is one of the most popular activities in the county. Besides, Miami is renowned for its clean, pristine sandy beaches, including Miami Beach, Sunny Isles Beach, Crandon Park, and Surfside Beach, all ideal for sunbathing, snorkeling, surfing, and diving, among other water activities.
Experience Miami-Dade's Nightlife
Miami-Dade is renowned for its vibrant and exciting nightlife, thanks to its numerous rooftop bars, cozy lounges, exclusive clubs, and pulsating party spots. Join other revelers in Miami's top-rated nightspots and enjoy food, drinks, live music, and entertainment as you while the night away.
Go Shopping at the Bayside Marketplace
Miami-Dade County has a long list of major shopping centers worth visiting, but the Bayside Marketplace in downtown Miami stands out above the rest. This shopping center has over 150 stores, carts, and kiosks, with dozens of restaurants, bars, and eateries for a one-stop shopping and dining experience. It hosts various family events and offers live music for endless fun and entertainment.
Get Preapproved for a VA Loan Today!
Getting a VA loan is the easiest way for Veterans and active military personnel to become homeowners. This zero-down home financing option has flexible eligibility requirements and favorable terms for borrowers.
With no loan limits, you can borrow as much as the lender can give you and buy your dream home anywhere in the country. Talk to a certified loan expert and get pre-approved for a VA loan today!
(May 30, 2023)
