What is a VA loan?
A VA loan is a mortgage guaranteed by the United States Department of Veterans Affairs. The advantage of getting a VA loan is that you don’t have to put money into the purchase of your new home. Additionally, there is technically no minimum credit score requirement to obtain a VA loan, although individual mortgage lenders can set their own thresholds.
Unlike conventional loans, VA loans do not impose private mortgage insurance – a premium borrowers typically have to pay when their down payment is less than 20%. That said, VA loans to do come with closing costs and financing fees, which vary depending on whether you are able to make a down payment and whether this is your first time applying for a VA loan.
As with conventional mortgages, your closing costs with a VA loan will typically be between 2% and 5% of your loan amount. Your financing costs, meanwhile, will depend on whether this is your first VA loan and whether or not you are making a down payment. For your first VA loan, you’ll pay a financing fee of 2.3%. For subsequent requests, you are considering a 3.6% fee. But if you are able to put down a 5% down payment but less than 10%, your finance charge will be 1.65% whether or not this is your first VA or your first loan. For a deposit of 10% or more, your financing costs will be 1.40% for a first request or a subsequent request.
Although VA loans do not require a down payment, if you have relatives or friends interested in giving you a down payment gift, you can use the gift for 100% of your down payment on a VA loan (if you wish. ). This is not the case for all types of loans.
How To Find The Best VA Loan Rates
Shopping around the different VA lenders is the best way to get the most competitive loan rate you could possibly qualify for. You can apply for several VA loans online at a time, and doing so within the same 30 days is better for your credit score than spreading out your research. (Every time you apply for a loan it results in a serious investigation of your credit report which may lead to a slight drop in your score, but several serious inquiries for the same purpose within a short period of time usually count as one. survey.) Many lenders who offer conventional loans also offer VA loans.
When shopping for a VA loan, keep the following in mind:
- The interest rate to which you are entitled
- Closing costs (these may vary from lender to lender)
- The terms of the loan (such as the time you have to repay it)