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November
11
11
What First-Time Homebuyers Need to Know About VA Loans
If you're a veteran interested in Bergen County homes for sale, you have options for a home loan. VA home loans are designed to help those who have served our country and make it easier for them to own their own home. Here's what you need to know about VA loans as a first-time homebuyer.
- How VA Loans Work
VA home loans don't come directly from the VA but from private lenders. The VA then guarantees to repay 25% of the total amount borrowed if you should default on the loan and are unable to pay it back yourself. That guarantee replaces a down payment, so you can purchase your dream home without spending years scrimping and saving first. - Limits and Qualifications
Any U.S. service member on active duty or veteran with a discharge status not categorized as dishonorable can receive a VA home loan, as well as National Guard and Army Reserve veterans and certain spouses of service members. The VA doesn't require a minimum credit score to qualify for a home loan, but the individual lender still will. Since the loan doesn't come directly from the VA, you must still be approved. Lenders will look at your credit history, income, and current assets to determine whether or not you can reasonably repay the loan amount. However, the minimum requirements tend to be significantly lower for VA loans than regular home loans, so even if your credit score isn't the best, you may still be able to obtain the funds you need. - Entitlement
Entitlement is the portion of your loan guaranteed by the VA. As a first-time homebuyer, you have full entitlement, which means the VA will pay back 25% of the full loan amount. The VA has no upper limit for how much they'll guarantee on a first-time home loan, but there may be limits on the total amount you can borrow. Once you've taken out the loan, you've used a portion of your entitlement. If you try to take out a second VA loan, either to buy a second home or to refinance your current home, the VA will deduct a portion from the amount they'll guarantee, based on how much you borrowed the first time—even if the first loan is paid in full. However, selling your home will restore your full entitlement should you wish to take out another VA loan. - Homes You Can Buy
VA loans are designed to be used for your primary residence, so purchasing a second home reduces the guaranteed amount. However, that doesn't necessarily mean you can only purchase a single-family home. You can also buy a condo or even an apartment complex with up to four total units—provided you live in one of them yourself. - Other Benefits
VA loans usually come with lower interest rates than traditional home loans. Additionally, they don't require private mortgage insurance. Without mortgage insurance, your monthly payments are lower, making repayment easier and allowing you to repay the loan more quickly.
If you're a first-time homebuyer, our real estate agents can help you navigate the process from beginning to end, from finding Rockland County homes for sale that meet your needs to finding the best home loan options. Contact us to get started!
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