Buying a home is an exciting prospect, but the idea of saving up enough money for a down payment is a little less appealing for many people. It’s often hard for first-time buyers or growing families to save up enough money to meet the down payment requirements for a conventional mortgage. However, there are loan options that don’t require a down payment, and for many, these mortgages can be lifesavers.
VA loans provide an avenue to homeownership for veterans or currently serving armed service members who may have trouble qualifying for a conventional mortgage.
VA Home Loans
VA loans are offered as a service of the Department of Veterans Affairs. They’re available for active service members, veterans, and eligible surviving spouses. The VA provides a home loan benefit – a government-backed promise of funding – designed to help military veterans and active service members buy a new home or refinance an existing one.
VA loans are administered by private lenders such as banks and mortgage companies. The Veterans Administration guarantees a portion of the loan, which allows the borrower to obtain more favorable terms on the loan in the form of lower interest rates and a zero down payment. VA loans have helped more than 24 million service members become homeowners since 1944.
Getting a VA Loan
The steps to obtaining a VA loan are similar to those for a conventional loan, but some of the requirements differ.
- Prequalification. A qualified VA lender (a local mortgage company or bank) will help you get prequalified for a VA loan. They’ll work with you to determine how much house you can afford based on your income, debt, entitlement, and other financial considerations. This process gives you the information you need to start looking at available houses.
- Preapproval. Preapproval is the next step toward getting a VA loan. During the preapproval process, you will be asked to produce paperwork that verifies monthly income, bank account balances, monthly obligations, and other financial information. This information is used to create a preapproval letter, which shows your real estate agent and home sellers that you’re a serious buyer who has the financial ability to purchase a home. This is an important step because in some cases, it can make the difference in getting the house or not. Sellers like to work with buyers who have the financial ability to move forward on a sale.
- Make the offer. Once you find the perfect home, it’s time to make an offer. Your real estate agent can help you determine a reasonable number for the home you’re looking at.
- The VA appraisal process. Once your offer is on the table, your lender will order a VA appraisal on the property. This has to be done for two reasons: to make sure the home appraises at fair market value and to make sure it meets the VA’s minimum property requirements (MPRs). These MPRs may include inspections of the mechanical systems, roof, crawl spaces, and a check for termites, mold, wood rot, and lead-based paint. A safe home is the ultimate priority.
- Close the deal. Once you’ve gone through the steps above, you’re ready to close the deal. You’ll meet with your mortgage lender to sign the closing documents – and you won’t have to worry about bringing a down payment.
More about VA Loans
VA loans are perfect for military personnel who want to take advantage of them. However, be aware that they’re only available for certain types of homes. If you’re planning on buying a working farm, you may be out of luck, but if you want to purchase a single-family home or condo that’s “move-in” ready, a VA loan is a good option. Also, while there’s no mortgage insurance required on a VA loan, there is a mandatory VA Funding Fee associated with them.
Homestead Financial Mortgage is Here for You
If you have questions about no-money-down mortgage loans – or any other type of mortgage – Homestead Financial Mortgage is here for you. Our experienced loan officers are happy to provide information and help you determine which type of mortgage will work best for your situation. The process may seem complicated at first, but our goal is to make it as simple as possible for you.
Homestead Financial Mortgage has branches in St. Louis, MO, Overland Park, KS, and Godfrey and Glen Carbon, IL. We also serve the metro areas surrounding these cities. Give us a call today with your no-money-down mortgage questions. We look forward to working with you!