The 100% VA home loan program is extremely popular with veterans not just here in Cleveland, Ohio/ Cuyahoga County but across the state of Ohio. In all, there are more than 20 million outstanding VA home loans in the United States. This special home loan product was introduced in 1944 as part of a Congressional package that assisted returning soldiers from WWII more easily assimilate back into civilian life. The VA home loan carries a guarantee to the lender, requires no money down and limits the type of closing costs the veteran is allowed to pay. Just these features alone are reasons this program is so popular for those who qualify.
Today, the VA home loan benefit is available to veterans of the armed forces, those with at least six years of service with the National Guard or Armed Forces Reserves, active duty soldiers with at least 181 days of service and un remarried surviving spouses of those who have died while serving or as a result of a service-related injury. Lenders can make the determination of eligibility by requesting directly from the Department of Veteran’s Affairs the Certificate of Eligibility. While veterans can make this request individually, lenders can instantly receive this certificate by accessing ACE, the Automated Certificate of Eligibility system. Just contact us at ph: 904-385-3988 if you need assistance.
Easily the most attractive feature of the VA home loan is 100% financing. The down payment on mortgage loans, especially for first-time buyers, is typically the biggest single obstacle when seeking approval for a home loan. In addition to the lack of a down payment the VA restricts certain closing costs from being paid for by the veteran. Besides property taxes and insurance, the veteran is only allowed to pay for an appraisal, credit report, origination fees, title insurance, recording and a property survey. All other charges must be paid for by the seller, the lender or through a special lender credit.
For lenders, another bonus when approving a VA home loan is the government-backed guarantee. This guarantee is referred to by lenders as the Funding Fee. This fee can vary but for those who are using the VA home loan for the first time- yes, you can use the VA loan more than once- with no down payment on a 30 year fixed rate loan, the fee is 2.15% of the sales price. Using VA 100% financing on home in Cleveland or Cuyahoga County selling for $200,000 the funding fee is $4,300 and instead of paying that fee out of pocket VA guidelines allow the funding fee to be rolled directly into the loan amount. The funding fee finances this guarantee and should the loan ever go into default, the lender is compensated at 25% of the loss. Most disabled Vets are exempt from paying the funding fee. In addition, current home owners that want to refinance their VA loan via the Streamline IRRRL program will pay a reduced funding fee of only 0.5%
VA loans do not require a monthly mortgage insurance payment. FHA and USDA loans do have an additional monthly mortgage insurance payment as do conventional loans with a down payment of 20% or less. VA loans also have some very competitive interest rates so when you combine the low rate along with the lack of a monthly mortgage insurance payment, veterans can qualify for a larger home loan should they so choose.
The VA home loan, like other government-backed home loan programs, limits the loan to be used to finance an owner occupied property only and can be used to purchase a single family home, townhome or eligible condo. VA loan limits generally mirror those of Conventional loans. In Cuyahoga County, the VA loan limit is $424,100 as of 2017. Home buyers seeking larger loan amounts should read up on the low down payment Ohio Jumbo loans.
For those who qualify and want to come to the closing table with as little cash as possible and still get a competitive rate, the VA home loan is hard to beat. Contact us at ph: 904-385-3988 with questions.