Veterans have sacrificed so much for the safety of our country. As a way to say thank you, many organizations, retailers, and companies offer discounts or programs to make buying and owning a home more affordable for those who have served. If you’re a veteran of the U.S. military, there are many ways you can score great savings on housing costs. From mortgage rates and home improvement to accessibility grants and discounted home insurance, you’ve got lots of unique options to explore when it comes to buying a house.
In this article:
- Save with a VA loan
- Other options for saving on your home loan
- Don’t pay fees the VA loan is exempt from
- Save more on home services
- Save after you move
Save With a VA Loan
The first, and perhaps the biggest, step in saving on your housing costs is to take advantage of the VA (Veterans Affairs) loan program. Getting a VA loan may seem like a no-brainer, but surveys have shown a third of veterans were unaware of the VA loan program. While we encourage you to seek quotes and options from multiple mortgage companies, there are some definite advantages of getting a VA loan over a traditional mortgage. Most impactful – the money you could save on your new home.
VA Loan FAQ
What is a VA loan?
The VA loan is an earned benefit of working for the U.S. Military. VA loans are backed by the Department of Veteran Affairs, which makes them a very desirable arrangement for lenders since the government is on the hook for a percentage of the loan if you default on your payments.
These home loans allow for easier access to housing because they’re the easiest to finance. The VA loan is one of the only types of loans that doesn’t require a down payment and it generally has more lenient credit and income requirements.
What are the perks of a VA loan?
• Save on your down payment. The VA provides more favorable loan terms, including no down payment as long as the sales price doesn’t exceed the appraised value. Down payments can typically be as high as 20% or more of the home’s purchase price with a conventional home loan.
• Save on your next home. Although the VA loan can only be used for your primary residence, it’s a benefit that can be used again and again. If you want to upgrade to a bigger home later on, you can use the VA loan program again.
• Save on your mortgage rates. VA loans are known for their affordability and for having the lowest rates in the market. This corresponds to their stable government backing.
Save on additional home buying fees, which aren’t allowed with VA loans.
• Save on private mortgage insurance (PMI). While conventional loans with less than 20% down and FHA loans require PMI coverage, VA loans don’t require this type of homeowners insurance.
Am I eligible for a VA loan?
If you’ve served in the United States armed forces, generally speaking, you’re eligible for a VA loan. You may qualify to apply for a VA loan if you:
• Served active duty for 181 days during peacetime
• Served 90 consecutive days of active service during wartime
• Are a member of the Reserve or National Guard (eligible to apply after six years)
• Are married to a service member who died in the line of duty or as a result of a military-related disability
In addition to these requirements, you also must meet the standard lender requirements for a mortgage. These requirements usually include information such as your income, credit score, and debt-to-income (DTI) ratio.
How does a VA loan work?
The VA loan can seem complicated, but it can be worth the extra steps in the long run to look into it. Here’s a brief overview of the process of securing a VA loan for your new home:
1. Prove you’re able to apply by obtaining a Certificate of Eligibility (COE).
Veterans will need a copy of their discharge or separation papers (DD Form 214) to get their COE. Eligible spouses will need the VA Form 26-1817. If you’d like assistance in this process, a lender may be able to take this task off your plate. Questioning your eligibility? Always check with a VA-approved lender or the VA itself to make sure you’re not missing out on the opportunity for the VA loan benefit.
Rob Greenbaum is the VP of AAFMAA Mortgage Services, which exclusively serves military and veteran home buyers. Greenbaum suggests you “ask your loan officer early in the process what documentation is required to ensure you have time to access everything – you don’t want to be delayed in the approval process because of paperwork issues.”
“You can identify ways to cut costs by comparing multiple lenders early on in the process – look at the terms, rates, discount points, and closing costs.”
VP, AAFMAA Mortgage Services
2. Choose a VA-approved lender.
This will be a personal choice based on your unique financial situation and preferences. Although there isn’t one overarching VA-approved lender list, Quicken is a good place to start based on our research on the best mortgage lenders. Once you choose a lender, you can get pre-approved to determine how much you can finance.
When it comes to evaluating your options, Greenbaum also recommends “you can identify ways to cut costs by comparing multiple lenders early on in the process – look at the terms, rates, discount points, and closing costs. This will help you determine who has the best loan for you and who has experience handling VA loans and serving the military community. And don’t be afraid to ask your lender if certain fees can be waived due to your veteran status or other factors.”
Read full article here: Veteran’s Guide to Saving on Housing Costs