So why should a Veteran choose a VA Loan over a conventional home loan? There are a number of reasons, but most Veterans who have used a VA Loan say the number one benefit is that there is no down payment required. Another noteworthy benefit is that VA Loans tend to have lower interest rates than conventional loans, and they are easier to qualify for as well.
The VA also offers these looser qualification requirements for Veterans because of their understanding of the sacrifices Veterans have made for our country; it’s a nice way of saying “thank you.” Because of the guaranty from the VA lenders are also much more likely to approve higher-risk borrowers.
Another reason to choose VA Loans is because borrowers do not have to pay private mortgage insurance (PMI). Unlike conventional and FHA financing, Veterans do not have to bear the burden of mortgage insurance payments without a substantial down payment for their loan.
Once you’ve earned your entitlement to a VA Loan, there is no specific time limit for choosing to use it. As long as you are eligible for a VA Loan you can use your entitlement. You can also use your entitlement again if you have a VA home loan that uses your guaranteed entitlement and you pay the loan back by getting a new loan by refinancing or purchasing a new home.
However, if you transfer the loan to another person by letting them take over payments on your existing VA loan, then your entitlement is still in use with this loan and you can’t get another VA home loan until that loan is paid off.
Another benefit of taking out a VA Loan is that approval is not based on credit score nor will your credit score affect your rate. Since approval is based on a number of factors including income and job stability, less than stellar credit will not stop you from getting a VA Loan. However, having a clean credit history for the past twelve months will factor into whether or not you will be issued a loan.
Also, having a past bankruptcy or foreclosure does not automatically eliminate you from taking out a VA Loan. While conventional lenders will not issue a loan within four years of a bankruptcy, the VA only makes borrowers wait two to three years.
Of course, there are a number of other factors that go into whether or not you qualify, but if your bankruptcy was more than two years ago it will not be an issue when applying for a VA Loan. Two to three years must pass following a foreclosure for a Veteran to be issued a VA Loan. However, a borrower will be unable to qualify if the previous foreclosure was on a VA Loan.
The current maximum VA loan limits for Alameda, San Francisco and San Mateo counties is $1,000,000 and apply to all loans closed January 1, 2011 through September 30, 2011.
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