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Real Estate · March 16, 2020

4 Things to Know before Opting for a VA Loan with 0% Down Payment

With over millions of Veterans and Servicemembers live in the U.S., only a few percentages of them bought a house by using a VA home loan program. While some are not aware of the advantages, some may think that getting a VA loan is a strenuous process that is better to be avoided, and the rest think that lenders will not clarify the whole process to them.

If you delve deep, you will understand that the VA loan program is the most beneficial program for the Veterans, who want to fulfill their dream of homeownership. You can get a VA Loan with 0% down payment and 100% financing. But before you opt for the loan that is guaranteed by the U.S. Department of Veterans Affairs (VA), know these things.

  1. No down payment, no mortgage insurance

It is perhaps the biggest benefit of choosing a VA loan. With this loan, you don’t need to make a down payment. While most mortgage programs, such as FHA and conventional loans, need at least 3.5 percent to 5 percent down payment, for a VA loan, it is 0%. When you choose this loan program, you can buy immediately, rather than years of saving for a down payment. With this loan, you can avoid steep mortgage insurance fees. Using a VA loan saves your money upfront, as well as escalates your buying power.

  1. VA loan rates are lower

Generally, VA loan rates are about 0.25% lower than those of conventional loans. The VA backs the mortgages, making them a lower risk for mortgage lenders. Those savings are passed on to Veterans. Moreover, VA loans come with some of the lowest foreclosure rates of any loan type, and thus, reduce the risk for lenders. It is not to surprise that Veterans and Servicepersons take homeownership seriously with this loan program. All these factors add up to lower rates and affordable payments for those who opt for VA loan programs.

  1. You can buy a condo with a VA loan

You can purchase various types of properties with a VA loan, along with a single-family home, a home of up to four units, as well as manufactured homes. But condominiums are generally overlooked by VA home buyers. Condominiums are ideal starter homes. Their price point is generally lower than that of single-family homes. And these are often the only affordable option in various cities. The VA keeps a list of approved condominium communities. Veterans can search by city, state, or even condominium name and find the ideal option.

  1. Lenient guidelines

Unlike various home loan programs, a lower credit score, bankruptcy or foreclosure does not disqualify you from a VA home loan program. Shop around at various lenders, as it will have its own stance on credit issues. But VA guidelines don’t state a minimum credit score to qualify. It offers leniency to approved loans with lower scores. Moreover, VA considers your credit re-established when you have established two years of clean credit following a foreclosure or bankruptcy.

To get a clear picture, consider this real-life example, where a house was sold on 11/27/2019 at 19407 Canter Field Court, Tomball, TX 77377 for $336,097 with 3 bedrooms and 2 bathrooms and the size of the home is 2,350 Sq Ft. With a VA home loan program, the down payment would be 0% or $0.00 and the loan amount is $336,097 and the cash to close including closing costs could be $8,588.

If you are convinced, then without spending any more time in idle thoughts, opt for an experienced lender and apply for a VA home loan with 0% down payment today.

Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.