Home ownership is a goal for many Americans. In addition to the freedom and stability that come with owning a home, homeowners can take advantage of prime tax benefits and rest easier knowing their monthly payments are going toward building equity instead of being thrown away on rent. These and other advantages are among the reasons many veterans choose to buy or build a home, and the VA home loan program was developed to help them achieve their goal.
What is a VA home loan?
Unlike conventional loans, VA loans allow veterans to obtain a mortgage loan and purchase a home without having to scale some of the biggest hurdles of home buying—including coming up with a down payment. The loans are provided by private lenders, such as banks and mortgage companies, but insured by the U.S. Government. As a result, lenders can offer more favorable terms but still be protected in case the borrower defaults on the loan.
What can a VA home loan be used for?
VA home loans can be used to purchase a home, townhouse or condominium; repair or adapt a home for personal occupancy; or build a new home. You do not have to be a first-time homebuyer, and the benefit is reusable. VA loans are also assumable, meaning another buyer can take over your mortgage loan and keep the existing interest rate and terms. This is not the case with the majority of conventional loans.
Five big benefits of VA home loans:
- No down payment. This is probably the biggest advantage for veterans, many of whom have had little chance to set aside any considerable savings or build up their credit history.
- More flexibility and leniency. With VA loans, lenders are more likely to overlook lower credit scores as well as past foreclosures or bankruptcies.
- No private mortgage insurance (PMI). Most conventional home loans require monthly PMI payments unless the buyer can come up with at least 20% down at the time of sale. This is not the case with VA loans.
- Competitive interest rates. Interest rates for VA home loans are about 0.5% to 1% lower than those associated with conventional home loans—which can add up to significant savings over time.
- Cap on closing costs. Also a great benefit for veterans, the VA caps what lenders can charge and allows sellers to pay the closing costs in full. This is not required, so the buyer still may be responsible for some of the closing costs (as well as the earnest payment), but the amount needed is often considerably less.
What’s the first step to getting a VA home loan?
Interested veterans, service members and eligible spouses can determine whether or not they qualify for a VA home loan by visiting the U.S. Department of Veterans Affairs eligibility page. If your credit score and income fit the criteria, the next step is getting a valid certificate of eligibility, or COE.
For veterans, obtaining a COE means you must first have a copy of your DD214 showing specifically the character of service and the narrative reason for separation—items 24 and 28 on the form. Once you have a copy of your COE, you can apply for your VA home loan online, through your lender or by mail.
Don’t let the perfect house slip away because you don’t have your DD214.
Before you even start shopping for a home, you should make sure you have a copy of your DD214 so that you can obtain a COE. If your DD214 never arrived, or if it was lost, stolen or destroyed, DD214Direct can help you get your form in less time—and often at a fraction of the price of our competitors.
It’s possible that you have contacted the National Archives already to locate your form for free using their eVetRecs system. This is great for veterans who can afford to take their time and are in no hurry to purchase a home. (Because they receive 4,000 to 5,000 requests daily, the National Archives requests that veterans do not even attempt to follow up on their request until at least 90 days have passed.)
However, if you have started your search for the perfect home and want to make sure you have all your ducks in a row, call DD214Direct at 1-888-997-4962 or fill out our online order form. Our experienced team works directly with archival researchers to obtain your military discharge documents faster and with fewer delays and headaches. And unlike the government, we offer email delivery to make the process even simpler.