VA Loans for Military Personnel-How You Can Benefit

VA Loans for Military Personnel-How You Can Benefit

Guest blog post by David Bremer, Branch Manager for Shamrock Financial (NMLS# 22633)


american-flag-resizedIt’s a common thought among potential home buyers – I can’t buy a home until I have enough of a down payment. Many think that this down payment must be at least 20% of the home’s sale price. While having a large down payment is certainly a great financial move, you don’t have to have this amount. For instance, you could be allowed to purchase a home with only 5% down, 3% down, or even nothing at all!*

Given the tightened lending practices, a 0% down payment sounds like a pipe dream these days. But there are people who are still eligible for this type of loan – military personnel, for example. Considering the sacrifice that they make to this country, it’s a little that can be given in return.

This special type of loan is known as a Veteran’s Administration (VA) loan, or VA loan for short. While it is provided by most lenders, the VA guarantees it. There are some of the benefits of a VA mortgage:

  • This loan is available only to eligible service members, and in some cases, their spouses.
  • In general, you can receive a loan up to $417,000, but for higher cost of living areas, some lenders will loan more, or even the entire amount.
  • Interest rates are comparable to those for conventional and FHA loans.
  • There is no mortgage insurance on VA loans.
  • The VA limits any fees that a lender can charge. In some cases, the standard closing fees for a VA mortgage may even be less than for other loans.
  • VA mortgages allow the seller to contribute up to 4% of the sales price toward the buyer’s closing costs, while conventional low down payment loans only allow for 3%. That can mean a lot on lower priced homes where 3% isn’t sufficient to cover the standard closing costs on most loans.
  • A VA mortgage also allows for streamlined refinancing, known as Interest Rate Reduction Refinance Loan (IRRRL). This means that the funding fee is lowered to 0.5% (waived for a service related disability) and can be done without an appraisal.
  • VA loans aren’t applicable for only one home purchase – any eligible military member is entitled to such loans for subsequent home purchases. While it may increase a little, the funding fee will never exceed the 3.3% maximum.

There are some points you need to be aware of:

  • For VA jumbo loans where the purchase price exceeds the county loan limit, the VA loan requires a 25% down payment of the average loan. For example, if the purchase price for a home is $550,000, then VA will need a down payment equal to 25% of the difference between the $550k purchase price and the $500k county loan limit – which is $12,500. That’s less than 3% down.
  • The VA charges a funding fee which is used to help guarantee the loans. However, this fee is reasonable and get financed into the loan, allowing it to be paid over time, and not out of pocket. Generally, the amount of this fee ranges between 0% – 3.3%. Military first time users buying with no money down will have a fee of 2.15%. But when that amount is added to the loan, it can cost significantly less each month than other mortgage insurance options required for other low down payment loans. But if you have a service-related disability of 10% or more, then the VA will waive this fee completely.

Those brave men and women who are part of the American military are heroic people who willingly put themselves in harm’s way for the sake of their nation, democracy, and peace. Therefore, helping them out to purchase a home seems like a small but necessary way to show appreciation for their service. If you are a member of the American military and are interested in purchasing a home, contact Shamrock Financial or your lender about a VA mortgage – your dreams can become a reality.


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*This blog is for information purposes only and is not an advertisement to extend customer credit as defined by Section 12 CFR 1026.2 Regulation Z. Program rates, terms and conditions are subject to change at any time.

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