David Letterman is retiring this year, and in honor of his late-night tenure, Embrace Loans is featuring our own Top 10 list about home loans offered through the US Department of Veteran’s Affairs (VA). So, from our home office in Maitland, Florida, here are the top 10 things you need to know about a VA mortgage:

  1. VA mortgages typically have better interest rates. The Department of Veteran’s Affairs doesn’t actually loan money to veterans. VA mortgage loans are created by approved private mortgage lenders and are guaranteed by the VA. Since the lender is protected against loss, they may provide better terms for the loans.
  2. It’s easier to qualify for a VA loan. Again, because the loan is guaranteed by the federal government, banks and other lenders have less stringent loan qualification standards.
  3. VA home loans don’t require private mortgage insurance (PMI). PMI is typically required for other types of mortgages, but because VA home loans are guaranteed, you won’t have to pay for PMI.
  4. A Zero down payment. Other mortgages may require up to 20 percent of the home’s value as a down payment. The VA, however, lets you finance 100 percent of your home’s purchase price, subject to certain limits. In most parts of the country, veterans can borrow up to $417,000 without a down payment. Some high-cost locations have even higher limits.
  5. No pre-payment penalty. If you’re able to do so, you can pay off your loan at any point without any penalty.
  6. Limited closing costs. The VA sets limits on the closing costs for VA home loans.
  7. VA mortgages are reusable. To obtain a VA home loan, you’ll need a certificate of eligibility (COE) from the VA. That entitles you to an amount that the VA will repay if you default on your loan. If you’ve paid off a loan in full and sold the property, you can have your entitlement restored.
  8. VA mortgages can be used to buy a home, either existing or pre-construction, as a primary residence, or to refinance an existing home. VA loans can’t be used to buy rental property, but can be used to refinance a property that used to be your primary residence.
  9. The VA requires a certain level of income left over each month after all major expenses are paid. Known as residual income, this requirement is a big reason that VA home loans have one of the lowest foreclosure rates of all major loans.
  10. VA home loans are available to veterans who meet certain length of service requirements, service members on active duty who have served a minimum period, certain reservists and National Guard members, and certain surviving spouses of deceased veterans.

To find out other important things to know about VA mortgages, contact our home office at 407-733-6425 or browse our blog. A VA mortgage is one of the best deals in home financing today, and we can help you use your benefits to get the home you’ve always wanted.

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