Posts Tagged ‘no down payment loan’

VA Loans: Funding Fee

August 16, 2016

blog-author-clayjeffreys3

VA loans do not require mortgage insurance, but they do have a VA funding fee… which is another way of saying an “up-front” mortgage insurance. The funding fee amount is based on the down payment being made, whether the borrower is considered a veteran or a reserve, and if the borrower has used a VA loan in the past.

There is no way to get around the VA funding fee unless the VA deems you to have a disability from military service. If so, then the fee is waived entirely regardless of whether or not the VA loan applicant makes a down payment. There are a few good things about the funding fee. First, the VA loan applicant doesn’t have to pay this fee at closing. Much like FHA up-front mortgage insurance, the funding fee is rolled into the loan amount. Second, the amount of the funding fee can be reduced by making a down payment. For example, let’s assume this is the first time a veteran has used a VA loan to buy a home.

  • With no down payment, the up-front fee is 2.15% of the loan amount. This fee is rolled into the home loan, so it is not required to be paid by the VA loan applicant at closing.
  • The funding fee drops to 1.50% when making a 5% down payment
  • The funding fee goes down to 1.25% if making a 10% down payment.

Again, this example is for VA loan applicants qualifying as a veteran status. There are different amounts if qualifying as a reserve status. The funding fee can also increase when using a VA loan on buying your next home. The subsequent VA loan use jumps to 3.30% if making no down payment, but drops back to 1.5% when making a 5% down payment. While no down payment is required, you’ll save thousands of dollars by making as little as a 5% down payment.

Regardless of the down payment, there is no monthly mortgage insurance payments ever on a VA loan.

Are you a veteran looking to buy a home? Is this home in Georgia? Regardless of the loan program you plan to use, contact me today. We can get you prequalified, look over all your loan options, and get you on your way to home ownership!

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VA Loans: How to qualify

August 9, 2016

blog-author-clayjeffreys3

VA loans are loan programs designed for those who have served our country as part of the Armed Forces. VA loans require no down payment, a 620 credit score, and one can purchase a home up to $417,000 without putting any money down.

VA loan applicants can purchase a home above $417,000, but must make a down payment of 25% of the money over $417,000. For example, let’s say someone is buying a $500,000 home. The first $417,00o doesn’t require anything for a down payment. The only money down would be 25% of the remaining $83,000, or $20,750. If you qualify, a half million dollar home could be purchased with just over $20,000 down… less than a total 5% down payment!

Who exactly qualifies for a VA loan? It is more people than you’d think.

  • Active service for at least 90 days during wartime
  • Active service for at least 181 during peacetime
  • 6+ years in the national guard
  • Spouse of a soldier who has died in combat OR died as a result of a service related disability
  • Also some personnel of Public Health Service officers and coast guard

Qualifying for a VA loan isn’t restricted to only to veterans. In fact, I closed a loan for someone earlier this year who was never in the service, reserves, ROTC or anything… he worked for the CDC in the Public Health Core of officers.

I know what you may be thinking… “Great, I qualify, no what?”

There are lots of reasons to use a VA loan if you qualify for one.

  • VA loans do not require a down payment
  • Even at 100% financing, there is no monthly mortgage insurance payment
  • The interest rate is better than a conventional loan

That is why I’ve yet to have a client not use a VA loan if they qualified for a VA loan. The only potential drawback to an FHA loan is the funding fee. More on that next time.

How do you know if you qualify for a VA loan? If you are buying in the state of Georgia, contact me today. Provide a copy of your DD214, and we’ll order your Certificate of Eligibility and get the loan process started!

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