Military service is incredibly honorable, and it requires discipline and dedication. When our service men and women return from deployment, it’s our job as citizens to take care of their needs and ensure their comfort.
One way we do this is through VA loans, and Bison State Bank is honored to be a reliable VA home loan lender near you. We understand the sacrifice that comes with military service, so we are proud to fight for the top loans for our veterans the same way they fought for us.
In this latest blog from the home loan experts at Bison State Bank, we go over the benefits of VA loans and how our team of mortgage professionals ensures veterans are taken care of throughout the entire home buying process.
What is a VA loan?
The Department of Veterans Affairs works with private home loan lenders to guarantee affordable home loans and other housing-related loans to help veterans buy, build, repair, retain, or adapt a home for personal occupancy. The VA guarantees a portion of the loan for these private lenders, allowing those lenders to provide more favorable terms to veterans.
The key pillars of loans provided by VA home loan lenders near you include:
- No required down payment
- Competitive interest rates lower than industry average
- Limited to no closing costs
- No required private mortgage insurance
VA home loans are also guaranteed as a lifetime benefit, meaning veterans can use these benefits multiple times throughout their life.
History of the VA home loan program
The VA home loan program began in 1944 as part of the original GI Bill of Rights. It aimed to level the housing playing field for veterans returning from World War II.
For the last seven decades, government-backed mortgages through VA home loan lenders have helped reshape this country. These loans played a critical role in developing new residential areas, and they are just as important now as they were in the 1940s. During the 75th anniversary of the home loan program in 2019, the VA celebrated its 24 millionth loan!
Who is qualified for a VA loan?
VA loan qualification is earned through military service. There are factors that may affect eligibility, but generally speaking a service member is eligible for a VA loan if they have:
- 90 days active duty during wartime
- 181 days active duty during peacetime
- 2 years for regular service members
- 6 years for Reservists and National Guard members
All uniformed service members are eligible for VA home loan benefits, including members of the Army, Navy, Air Force, Marines, Coast Guard, Space Force, National Oceanic Atmospheric Administration (NOAA), and Public Health Service. Bison State Bank’s home mortgage experts can help you understand more about VA home loan eligibility.
Benefits of VA home loans
The main benefits from VA home loans lenders near you provide include:
- No required down payment
- Lower interest rates
- No private mortgage insurance
- Limited to no closing costs.
Lenders can provide these benefits for veterans because the VA guarantees a portion of the loan.
Bison State Bank doesn’t stop with just providing great rates, however. As a VA home loan lender, we take that distinction seriously because we are honored to serve veterans. That means being involved with their home search throughout the entire process and guaranteeing our veteran clients end up with a good rate and a home that’s perfect for them and their family.
How VA loans compare to other loans
To better understand the benefits of VA loans, it’s good to look at how they compare to more conventional home loans.
A conventional loan typically requires a down payment of at least 3% of your mortgage, and the fees vary depending on who your lender is. Eligibility for a conventional home loan also requires a certain credit score, which varies depending on your lender.
For a VA loan, there is no down payment, but veterans are subject to a VA funding fee, which is a one-time payment that helps lower the cost of the loan. This charge can be between 1.4% and 3.6% of the loan amount, depending on your down payment or if you have used your VA loan benefit before. Veterans who receive the VA disability compensation are exempt from the funding fee.
As for qualification, there is no set credit score necessary from the VA, though VA home loan lenders near you may have a minimum credit score requirement.
There are situations where a veteran might not use their VA home loan benefit, however. The VA loan is only for primary residences, so veterans looking to purchase a second home or investment properties will need to apply for a conventional loan.
Extra benefits of VA loans
The main benefits of VA loans are fantastic, but the support for veterans goes beyond those main pillars. Here are some additional benefits veterans receive through VA loans.
- No prepayment penalty: Some lenders charge a fee for paying off a home loan before it matures. It’s a way for financial institutions to recoup money they may miss out on through interest payments. The VA loan ensures borrowers can pay off their mortgage at any point during the life of their loan without any penalty.
- Minimum property requirements: The VA doesn’t just want to put veterans in homes. They want to ensure these homes are suitable for both the veteran and their family. Minimum property requirements from the VA include high-level property condition guidelines, which help guarantee veterans purchase safe and sanitary housing. This also includes a mandatory termite inspection for homes falling within “termite states”.
- Additional appraisal protection: An appraisal through the VA is required with all VA loans. The VA will send a qualified appraiser to assess the property’s value and condition, which establishes an appraised value and ensures the home meets the minimum property requirements.
- Acceptable income: Like most home loans, a VA loan requires proof that the borrower can make their monthly payment. Where VA loans differ from conventional loans is what constitutes acceptable income. For many VA home loan lenders near you, multiple forms of income are accepted for veterans. These can include basic allowances for housing, disability pay, retirement income, hazard pay, overseas pay, and other forms of military income.
- Lifetime benefit: A VA loan isn’t a one-time offer. Veterans who qualify for a VA loan can use this program throughout their lifetime, with no limit on the amount of times they use it. It’s a benefit that never expires, and you don’t have to pay your VA loan back in full to use it again. In some cases, a veteran can even have two VA loans active at the same time through second-tier entitlement.
Refinancing a VA loan
Veterans also have the option to refinance their VA loans through the VA cash out refinance program. This program lets veterans replace their current loan with a new one under different terms. Reasons why you might want to refinance include taking cash out of your home’s equity to pay off other debts or make home improvements, or to turn a non-VA loan into a VA-backed loan.
How Bison State Bank supports veterans with VA loans
Our support for veterans goes beyond providing low interest loans. We are dedicated to client satisfaction across the board, and part of that dedication means actually listening to our clients’ needs. This is especially important when it comes to VA loans. Our in-house underwriting system means we don’t have to bounce your loan back and forth between us and a third party, and if there’s any issues we can address those head on.
VA loans come with a lot more common-sense underwriting as well, which further helps secure quality loans for veterans. Ultimately as a VA home loan lender, we are given a lot of flexibility with how we move forward. Disclosures, sales contracts and appraisals are all geared towards striving to deliver the best loan possible for our veterans. It’s the least we can do after the sacrifices they made while serving our country.
Bison State Bank is honored to be a VA home loan lender near you
Buying a home is one of the biggest financial decisions of your life. It’s important to have the right team to support you throughout the process.
Our experienced mortgage professionals at Bison State Bank are passionate about helping our clients with their first steps toward a better future. That goes double for veterans who trust us with their VA home loans. We understand the sacrifice that comes with military service. You fought for us, let us now fight for you.
Unlike other online mortgage lenders, our loan officers won’t try to fit you into a loan that’s not right for your situation. We are seasoned professionals in this industry with the experience to fit each client with a tailored loan solution. The end result leaves them satisfied with their purchase and confident in their decisions.
Contact us today to see how our honesty, integrity, and experience helps with finding you the right home loans.
A special thank you to our underwriting manager, Valerie Buhr, for providing her expertise on this topic.