U.S. military veterans have opportunities to enjoy some richly-deserved benefits in other aspects of their lives, including some special options for financing their homes. VA loans may give active military personnel, retired veterans, and in some cases surviving family members of veterans the ability to purchase homes that they many not be able to through more conventional mortgage loans.
Since this loan isn’t as flexible as other traditional loans, you may want to consider foregoing these benefits.
We’ve listed the VA loans biggest benefits and drawbacks, to help you decide if this is truly your best option.
Depending on where you intend on purchasing property VA loan amounts may impose varying guaranty limits.The guaranty limit refers to your VA entitlement, the portion of your loan that escapes the down payment requirement.
In most counties, that limit currently averages $435,100, although in several major metropolitan markets it can range as high as $679,650. If you’re in the market for a more expensive home, you may end up making a down payment, making your VA loan competitive against other loan options.
Down Payment Requirements
VA loans do not require the down payment typically needed for a more conventional or FHA loan. (The only other loan with no down payment requirement, the USDA loan, applies to rural areas and comes with some prohibitive income restrictions.)
The elimination of a mandatory down payment, coupled with relaxed financial qualifications, make taking out a VA loan the most sensible choice for individuals who suffer from limited resources, bad credit or short credit histories.
A VA loan is best suited to cash-strapped or credit-challenged military personnel who might otherwise struggle to get a conventional mortgage loan. The of loan offers tremendous flexibility and qualifying criteria. That include less stringent credit score requirements and debt-to-income ratios. In fact, VA loans may come with no maximum debt ratio.
If you’re thinking of taking out a VA loan, you should be planning to use the home as your primary residence. Because that’s one of the only few restrictions the VA does place on prospective buyers. You can’t get a lakeside cottage or summer apartment. If you’re thinking of getting a second residence than you’ll need to consider other options.
As always, your best move is to call your trusted real estate professional to discuss the VA home purchase process and find out if it’s the best option for you.