VA Home Loan: An Extraordinary Benefit For Our Veterans

Lately, there has been a renewed interest in the VA mortgage program. This is a great benefit provided by the Veteran’s Administration for our past and present military personnel. Unfortunately, I believe it is vastly under-utilized and under-marketed mortgage product to the disservice of our military personnel and veterans. It is the best 100% mortgage financing available at competitive interest rates. Here are a few highlights and important things to know regarding the VA loan.

No down payment required

The best feature of the VA mortgage is that there is no minimum down payment. A borrower can borrow up to 100% of the purchase price of the property. The maximum loan amount for Illinois is $417,000. In addition to the purchase price, the VA funding fee may also be financed into the mortgage.

No mortgage insurance

Unlike other low down payment loans, with a VA mortgage there is no monthly mortgage insurance payment. VA funds its guarantee through a funding fee assessed at loan closing (and typically financed into the loan). The funding fee is a percentage of the loan amount determined by a combination of the amount of down payment, type of veteran, and whether or not the borrower has utilized the VA guarantee before. Here’s a table for purchase transactions:

Type of Veteran	Down Payment	First-Time Use %	Subsequent Use %
Regular Military	None to < 5%	2.15%	3.30%
	5% to < 10%	1.50%	1.50%
	>= to 10%	1.25%	1.25%
Reserves/National Guard	None to < 5%	2.40%	3.30%
	5% to < 10%	1.75%	1.75%
	>= to 10%	1.50%	1.50%
Disabled Veteran	N/A	Exempt	Exempt

What about my closing costs?

The VA guidelines allow all of the traditionally borrower paid closing costs to be paid for by the seller, with no limit. This is a big difference between VA loans, FHA loans (up to 6% of purchase price), and conventional financing (between 2% and 9% maximum seller credits depending on the amount of downpayment). These closing costs include origination points, processing fees, title fees, government recording fees and transfer stamps, and reasonable discount points.

There is a 4% limitation on any seller concession for pre-paid items, which generally consist of payment of the funding fee, prepayment of buyer’s property taxes and insurance, gifts such as a television, payment of extra points to discount the interest rate, and payoffs of credit balances and judgments.

Am I eligible? What’s next?

Therefore, if you are veteran or currently enlisted in the military, you most likely qualify for this excellent VA benefit. You can determine your own eligibility per the guidelines on VA’s website. You can also get started on your VA pre-approval by simply giving me a call at 847-744-0168. I can assist you through the entire process, beginning with obtaining your Certificate of Eligibility and all the way up through the closing of your purchase. Here’s another great article to read as you search for a loan originator to help you through this process: 9 Quick Tips To Finding A Good Loan Officer.