Key Information You Need to Know About VA Home Loans

Key Information You Need to Know About VA Home Loans

The federal Veterans Affairs (VA) guaranteed home loan is a great benefit to eligible veterans, active-duty service members, reservists, and surviving spouses that others often wish they could access. Here are some facts about the VA home loan program to help eligible borrowers better prepare for homeownership.

What is a VA home loan?

The VA helps eligible individuals buy, build, make home improvements or adapt a home for primary occupancy. VA home loans are provided by private lenders, such as credit unions and mortgage companies. The VA guarantees — or stands behind — a portion of the loan, which allows lenders to provide more favorable terms. The VA home loan guaranty provides insurance to the lender if the borrower does not make payments and ultimately has to forfeit the home.

What is the maximum amount of a VA home loan?

There is no maximum amount that an individual may borrow using a VA home loan, but the VA does limit its responsibility by capping the guaranteed amount. The maximum guaranty depends on the area. For example, the maximum guaranteed loan amount for eligible borrowers in Honolulu and Maui counties is $721,050 and $679,650, respectively, with no down payment.  Higher guaranteed loan amounts may be available if the borrower contributes a cash down payment.

What are the advantages of using a VA home loan?

The VA home loan does not require a down payment and involves limited closing costs, so buyers may not have to save for years to purchase a home. Additionally, private mortgage insurance (PMI) is not required, which may save borrowers hundreds each month. VA home loan interest rates are typically lower than non-guaranteed conventional loans, and lenders do not charge a pre-payment penalty if the loan is paid off early.

Is there a minimum credit score for a VA home loan?

The VA does not have a minimum credit score requirement, but the VA does not issue loans — lenders do. Each lender determines its own benchmark, and 620 tends to be a common credit score requirement for a VA home loan.

What are the qualifications for a VA home loan?

All borrowers must have satisfactory credit history, sufficient income, and a valid Certificate of Eligibility (COE), to meet qualification requirements for a VA loan.

It is worth noting that VA benefits can be used more than once and the benefit never expires.  Veterans, active-duty service members, reservists, and surviving spouses should work directly with a lender to apply for a Certificate of Eligibility and to prequalify for the loan based on affordability.

Hawaii State FCU is here to help you buy a home. Get started with your VA home loan application by reaching out to one of our Mortgage Loan Officers.

Want more information on homeownership? Check out our eLearning module on mortgages.



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