About VA Loans
VA loans are not loans from the Department of Veteran
Affairs (DVA). The DVA
does not loan money however they do guarantee the
loans making it easier for
you to qualify. Think of the DVA as a co-signer. When
you apply for a loan
from a lender (Banks, credit unions etc) the DVA is
telling that lender if
you default on the loan, they will repay it. This
allows lenders to know
they will get repaid, making them more willing to
approve you for a loan.
Credit Score
Because the DVA is guaranteeing your loan, lenders
can use more lenient
guidelines for approving you as a buyer. For instance
your credit score is
largely not a factor in the decision. However, your
consecutive payment
history is. If you have a history of at least 12 months
of consecutive
payments to your creditors without being late, you
can qualify. Even if you
have a poor credit score.
VA Funding Fee
Because the Department of Veteran Affairs is guaranteeing
your loan with a
lender, they charge a funding fee that pays for administering
the program.
This fee is collected at the time you close your loan
or it can be financed
with your loan. This fee gets sent to the Department
of Veteran Affairs and
is not for the lender.
FEEs
First time users of VA Loan benefits
|
|
Active duty/Retired
|
Guard/Reserve
| |
0 down payment |
2.15% |
2.40%
|
| 5-10% down payment |
1.50%
|
1.75% |
|
10% or more down payment
|
1.25% |
1.50%
|
Additional use of VA Loan benefits
| |
Active duty/Retired |
Guard/Reserve |
| 0 down payment |
3.30% |
3.30% |
| 5-10% down payment |
1.50% |
1.75% |
| 10% or more down payment |
1.25% |
1.50% |
Example $200,000 X 3.30% = $6,600 VA Funding
fee
Although some see this as a large fee, considering
the benefits of a VA
loan, it is usually the best loan option for qualifying
veterans.
VA Funding Fee Exemption
The following persons are exempt from paying the funding
fee:
Veterans receiving VA compensation for service-connected disabilities.
Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating.
Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such
surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).
|
VA Loans
