1) No Down Payment                                                                                   

A VA purchase loan does not require a down payment. This feature saves thousands of dollars compared to alternative financing. For example, purchasing a home for $700,000 with an FHA loan requires a down payment of $24,500, and a 5% down payment conventional loan requires a down payment of $35,000.  

In addition to the features listed below, the no down payment option makes VA the premier first-time buyer loan program.  

2) No Monthly Mortgage                                                                  Insurance Mortgage insurance protects the lender in the event of a loss caused by default.  A VA loan has no monthly mortgage insurance cost. An FHA loan used to purchase a $700,000 home has mortgage insurance of about $514/month; a 5% down payment conventional loan with a 700 FICO score has about $430/month of mortgage insurance. 

Therefore, a VA buyer can purchase the same home for a lower payment compared to using an FHA or conventional loan.   

3) Lower Rates                                                                                                 VA loans are guaranteed by the federal government which means lenders are insulated from most of the risk associated with a potential loan default. With less default risk, mortgage lenders offer better interest rates.  

Conventional loans are not insured or guaranteed by the federal government, so lenders face higher default risk. As a result, VA loans are priced much better than conventional loans.  

As a local mortgage broker, we can offer the best VA loan purchase and refinance interest rates in the marketplace.   

4) More Lenient Loan Underwriting Guidelines                                   

• A) VA loans will allow borrowers to qualify with considerably higher income to debt ratios compared to conventional loans. That means a VA buyer can qualify for a higher mortgage payment than a conventional loan buyer. Hence, they can buy a larger and more attractive home using a VA loan.                                                                                                 

• B) VA loans have more lenient qualifying guidelines for those who’ve had significant adverse credit events, such as a foreclosure or bankruptcy. Additionally, we can approve VA loans with FICO credit scores that are below the minimum required for a conventional loan.                                                

• C) Mortgage loans are priced based on a variety of characteristics, including credit scores. VA loans have relatively modest adjustments or “hits” to pricing for lower credit scores. Conversely, conventional loans have significant adds or hits for lower credit scores. 

Consequently, the price disparity between VA and conventional loans is amplified for those with lower credit scores.  In sum, VA loans have several easy qualifying features that enable veterans to achieve the dream of home ownership.   

5) VA Funding Fee Waivers                                                                         VA loans are subject to a VA funding fee that offsets the government’s costs to administer the program; the funding fee is remitted to VA after closing.  

The funding fee factor is based on whether the subject loan is the first time or subsequent use of the entitlement and is reduced when the buyer elects to make a 5% (or more) down payment.   

Veterans with a rated disability are exempt from the VA funding fee. We verify the applicable funding fee factor or exemption when we obtain the Certificate of Eligibility for our borrowers.  

For those that commence their disability rating process before obtaining a VA loan, VA will subsequently reimburse the funding fee once the disability determination is finalized. Therefore, there’s no need to wait for the disability determination before buying or refinancing a home.   

6) Streamline Refinances                                                         For those with an existing VA loan, VA guidelines permit a simplified or streamlined refinance that enables the existing loan to be paid off with a new, lower interest rate loan without an appraisal or any income and asset qualification. The Interest Rate Reduction Refinance Loan (IRRRL) has a modest VA funding fee, unless the borrower is exempt.  

VA uses a recoupment formula to ensure a proposed IRRRL reduces the interest rate by at least .5% and recovers the hard cost of the loan within 36 months. To meet the recoupment rule, the sum of monthly payment savings must exceed the hard costs within 36 payments.  

In sum, a VA IRRRL is an easy way to lower your mortgage payment without the   effort and documentation associated with a purchase or cash out loan.  

7) Cash Out Refinances                                                 Veterans can obtain a VA cash out loan for up to 100% of the home’s appraised value. This feature allows for consumer debt consolidation (such as paying off credit card debt) to lower monthly household expenses.  

A VA cash out refinance loan can also be used to finance home improvements such as remodeling a kitchen, bathrooms, or adding an outdoor living space. Loan proceeds can be used for any purpose, including education expenses and business start-up costs.   

In the event you want to renovate your home but don’t have enough equity (the difference between “as is” value and the current loan balance) to complete the improvements with a VA loan, we offer a renovation loan that uses the “as improved” value (the value after the proposed improvements are added to the “as is” value) that may allow you to entirely finance the proposed upgrades.   

Our renovation loan is like a construction loan and is ideal for energy efficient upgrades, installing a pool, or adding additional living space, such as an auxiliary dwelling unit (commonly referred to as a granny flat or casita).  

8) VA loan benefit can be reused                                             

A veteran can repeatedly use their VA loan benefit. When a home is sold and the underlying VA loan is paid off, the veteran’s full loan eligibility is restored and becomes available for a subsequent purchase.  

In the event the veteran retains the existing home financed with a VA loan and is subsequently refinanced with a non-VA loan, VA guidelines allow for a one-time restoration of entitlement that permits the veteran to re-use the full loan entitlement to purchase or refinance with a new VA loan.  

In some cases, a veteran can retain a VA loan on an existing home and purchase a new owner-occupied home with the residual entitlement.    

9) VA loans are approved and funded by local lenders     

VA does not approve or fund loans directly. Instead, VA guarantees loans after they are funded.   

To obtain a VA purchase or refinance loan, a veteran can work with a mortgage banker, commercial bank, credit union, or mortgage broker such as Eagle Nest Realty & Mortgage Inc.  

Mortgage brokers commonly have the best pricing (the combination of interest rates and associated discount points) because we can compare pricing offered by our approved lenders. We broker our VA loans to the best direct lenders in our marketplace.  

Unlike most VA loan originators, we offer concierge service: Our borrowers communicate exclusively with the loan officer from start to finish; they are never handed off to loan assistants, loan processors, or underwriters.   

10) VA loans can be used to purchase or refinance a condominium 

In expensive markets, a condominium can be a good first home purchase option.  

A veteran can use their loan eligibility to purchase or refinance a condominium in a VA approved project. VA project approval means the subject project meets the construction and other criteria required to guarantee a VA loan in a particular project.  

Regular project review by VA provides valuable third-party oversight not commonly available for non-VA approved projects.  

Thus, VA condo approval requirements can filter out projects that may have unforeseen issues.