Securing financing for a home has never been more difficult as it has been in recent years. Unfortunately, due to the waning economy and tight housing market, lenders have been more apprehensive about giving out home loans, especially to those with less than perfect credit or without large down payments.
Luckily for Wisconsin veterans and active duty service members, the VA Home Loan program has remained a trusted and reliable source of affordable home financing. In fact, this program has helped nearly 19 million service members nationwide secure home financing.
What is the VA home loan?
The VA doesn't actually make home loans. Instead, it basically insures a portion of them, which gives lenders greater confidence and allows them to lend without worrying about down payments or private mortgage insurance.
Although typically used for the purchase of a single-family home, the VA Home Loan may also be used for new construction, condominiums and refinancing an existing mortgage.
What are the benefits?
Today, conventional borrowers typically have top-flight credit scores and enough cash on hand for at least a 5 percent down payment. Even FHA loans come with a minimum 3.5 percent down payment. For military members in particular, these requirements aren't always easy to meet, making homeownership seem impossible.
Right now, VA lenders are generally looking for a credit score of at least 620, which is well below what conventional lenders require. The program also presents some key benefits, including:
- Flexible loan terms and competitive interest rates
- No down payment required
- No private mortgage insurance (PMI) required
In Wisconsin, where VA loan volume increased 10 percent last year compared to 2010, qualified borrowers can obtain a loan up to $417,000 without putting down a single dollar.
Who is eligible?
Millions of veterans and active military are eligible to participate in the program. But not everyone who is eligible will ultimately get a loan. Prospective borrowers will need to meet both VA and lender requirements when it comes to credit, income, debt levels and other key metrics.
- You may be eligible for a VA loan if you:
- Served on active duty for at least 90 days during a time of conflict
- Served on active duty for at least 181 days during peacetime
- Served for 6 years in the National Guard or Reserves
Veterans and military families considering a home purchase or refinance should take a long, hard look at their home loan benefits. It's not the answer for every borrower and homeowner out there. But this nearly 70-year-old program continues to help level the playing field for those who fought to preserve the American Dream.
Chris Birk is a former journalist and the author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.” He is also content development director for Veterans United Home Loans. Follow him on Google+.