If you’ve served in the military or you’re currently on active duty and you’re interested in buying a home, a V.A. mortgage could be a great option for you. In a VA loan, a portion of the loan is underwritten – or guaranteed – by the U.S. Department of Veterans Affairs, which means lenders who write mortgages under the VA program assume less risk than they would under a conventional mortgage.
Home buyers who qualify for a VA loan can buy their primary home with no down payment as long as the cost of the home is less than the home’s appraised value. And, although the actual entitlement is capped at $144,000, or roughly 25% of conforming loan limits, when the cost of the home exceeds the entitlement limit but still falls within the conforming limits (the current upper limit for a conforming loan is $625,000), VA borrowers may still be able to buy the home using the entitlement AND with no down payment.
So what are the advantages of the VA Home Loan program?
The biggest disadvantage of the VA mortgage program: If you aren’t a veteran or involved in active duty, you’re not eligible. Other disadvantages:
Although your circumstances can certainly vary, for most veterans and active-duty service members, the VA loan program is a great choice for a mortgage. Take a look at your finances, talk with your lender, and if you decide it’s right for you, don’t forget to apply early for your COE.