If you're in the active duty military service and planning to buy a home, you may wonder about the people with which you're competing. The house market has been red hot for quite some time now, with existing-home sales surging 6.5% in February, according to the most recent statistics available from the National Association of Realtors. Since demand is outpacing supply, asking prices have followed suit, increasing on a year-over-year basis for 96 consecutive months.
But when it comes to who, exactly, is doing all the buying, would it surprise you to learn that veterans are chief among them? Well, it's true – and they're taking advantage of these opportunities thanks in large measure to their VA loan eligibility. Backed by the U.S. Department of Veteran Affairs, VA loans have been around for 76 years, signed into law by President Franklin Delano Roosevelt way back in 1944.
The program itself has undergone a number of changes between then and now, but ever since they were introduced, VA loans – and the government agency that oversees them – have helped make homeownership more affordable for millions of people who honorably served their country.
Although you may not have reached veteran status quite yet, qualifying for a VA loan is possible for military members like you who are in the active duty service, be it the U.S. Army, Navy, Coast Guard, Air Force or Marines. Omni Financial is not a VA lender, but we may be able to help you with some information so you too can experience the plethora of VA loan benefits that are waiting for you.
More active duty use VA loans than veterans
Before we get into the service requirement specifics of VA loan eligibility, it's useful to see the extent in which active duty service members leverage these fine mortgage products. According to the most recent statistics available from the NAR, over three quarters of active duty military who currently own a house – 77% – used VA loans. Just 15% went with a conventional loan. That's a significantly higher rate than the 58% of military veterans who bought their house with a VA mortgage.
"Qualifying for a VA loan is possible for active duty military members like you."
So, can active duty personnel get a VA loan? Clearly, the answer is yes. And you can understand why VA loans are so popular. In addition to the fact that borrowers don't need to pay monthly mortgage insurance premiums – unlike FHA loans, conventional loans and most other mortgage options – VA loans don't require down payments, at least not in most cases. Saving for a down payment isn't easy, as polls show this aspect of the homebuying process frequently proves to be the biggest hurdle. A down payment as low as 5% is not exactly a drop in the bucket. Given that the current median existing-home price in the U.S. hovers around $270,100 as of February 2020, according to NAR estimates, a 5% down payment costs buyers over $13,500. There aren't too many people who have that kind of cash on hand.
Eligibility for a VA loan means down payments are waived. Here are a few other perks this mortgage program provides veterans and active duty service members:
- Competitive interest rates, often lower than other home loan types
- Can't be penalized for paying off loan before term ends
- Can be used for many different property types aside from single-family
- Affordable closing costs
- Can refinance up to 100% of home's value
And that's just to name a few; the list goes on and on.
Is it hard to get a VA loan?
If you're brand new to homebuying, you're likely wondering just how difficult it is to obtain a VA loan. So long as you're aware of the existing stipulations prior to filling out the application, you shouldn't have too much of a problem. They include:
- Ongoing flow of regular income
- Two years' worth of income tax returns
- Statement of available funds, such as in a savings account or 401(k)
- 90 days in a row of active duty service during wartime or 181 days of active duty service during peacetime
- Valid Certificate of Eligibility (COE)
These are the main requirements established by the Veterans Affairs government agency. You may also be eligible for a VA loan if you're a surviving spouse or spouse of someone whose sacrifices resulted in a services-connected disability.
Generally speaking, members of the National Guard don't qualify as active duty. Because of this, eligibility standards are a bit more stringent. It takes six years of honorable service in the National Guard or Reserves to be a potential VA loan borrower. However, National Guard and Reserves may also be able to obtain VA loan benefits if they're mobilized for active duty service for no fewer than 90 days.
Can you get a VA loan with bad credit?
There are almost always exceptions when it comes to the rules and regulations needed for home loan approval, from a VA lender or otherwise. The short answer is yes, you can obtain a VA loan if your credit score is less than perfect. However, it's not as easy, and you may also wind up paying more in interest as a result of a bad credit score.
And that's where Omni Financial may be able to help. Again, we're not a VA lender, but one of the things we specialize in is bad credit military loans. Upon approval, you can use these funds for just about any purchase, including travel. By submitting your monthly payments consistently over time, you can improve your credit standing and take advantage of mortgage interest rates that remain at historical lows.
Please contact us to learn more.
The information provided in this blog post is for informational purposes only. It should not be considered legal or financial advice. You should consult with a financial professional to determine what may be best for your individual needs.