VA mortgages offer some major advantages over conventional home loans, including no down payment required on most loans. VA mortgage rates today are one of the best deals around, often lower than rates on conventional loans by a quarter percentage point or more. Credit requirements are flexible as well. So they're an attractive option for borrowers with a military background or connection.
VA mortgages are available to U.S. military veterans and to those currently serving who have completed certain service requirements. Others with a U.S. military connection may be eligible as well, including surviving spouses of veterans who died of service-related causes and employees of selected government agencies. Former service members with a dishonorable discharge are not eligible.
Here's a look at some of the key features:
VA mortgages are one of the few ways you can buy a home with no down payment. Generally speaking, the VA gives lenders a guarantee of 25 percent of the loan amount up to a certain limit. This is known as the VA guaranty. For the lender, that's like having a 25 percent down payment, which is a substantial amount. So you can finance 100 percent of the cost of your home.
LOW VA MORTGAGE RATES
As with other types of loans, current VA mortgage rates fluctuate depending on market conditions. VA mortgage rates today may be different from VA mortgage rates next week or even tomorrow. This is why it's important, when shopping for a VA loan from various lenders, to get all your rate quotes the same day, preferably within a few hours of each other, so you can make an accurate comparison of the rates VA lenders are offering.
FLEXIBLE CREDIT REQUIREMENTS
borrowers who have little or no established credit history – they've never had things like credit cards, auto loans, etc. or made little use of them – can sometimes qualify for a VA mortgage using what's called alternate credit history. That uses records of things like payments for rent, utilities, cell phone service, internet services or other things billed regularly to show a record of reliably making payments on schedule.
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VA Loan Eligibility Requirements
You may be eligible for a VA Home Loan if you meet one or more of the following conditions:
To be eligible for a VA Loan, veterans, active duty service members, National Guard members and reservists must meet the basic service requirements set forth by the Department of Veterans Affairs. Spouses of military members who died while on active duty or as a result of a service-connected disability may also be eligible.
It's ultimately up to the VA to determine eligibility for the home loan program, but prospective borrowers can get a good idea by looking at the VA's basic eligibility guidelines.
You have more than 6 years of service in the National Guard or Reserves,
You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
You have served 90 consecutive days of active service during wartime,
You have served 181 days of active service during peacetime,