One of the great advantages of having served this nation is the VA benefits that you receive. These have been a real asset when it comes to achieving the American Dream for millions of families all over this country. But how exactly does it work? Who can use these benefits, and when? And why is it such a popular benefit when it comes to buying a home? Well, sit tight, and I’ll explain everything.
Firstly, a quick history on VA benefits. In June of 1944, fresh off of the Allied victory in World War II, President Franklin D Roosevelt signed into law the Servicemen’s Readjustment Act - which is widely known today simply as the GI Bill. This bill was essentially to give a jumpstart of what’s widely considered the American Dream to soldiers returning from war. This would be accomplished by providing aid to returning soldiers so that they could go to school, start businesses, or buy a home. It was a huge part of what made widespread homeownership possible, and was responsible in no small part for the housing boom that America experienced during the middle of the 20th century.
In a nutshell, the benefits of a VA home loan are enjoyed by veterans and active duty military alike, and are a huge factor in servicemembers and veterans being able to buy homes as easily as possible. The loan works like this - each VA Buyer has an entitlement of (at the time of this writing) $832,750 to use towards the purchase of their primary residence. This does not mean that everyone is eligible for the full amount, as you would still have to be approved for such a loan like anyone else, and credit and debt-to-income are still factors in determining that amount. But if you find a home that you’re approved for and it’s within your entitlement and otherwise eligible for the program, you can use your VA benefits to secure a loan.
But why would you? What’s the benefit? Well, that’s simple. Firstly, the loans are cheaper. They don’t require you to purchase mortgage insurance, which already saves you hundreds on your monthly mortgage payment in cases where you aren’t putting 20% down. But for me, the big one is that you don’t actually need to put any money down at all when you purchase a home using your VA benefits. And in many cases, my clients end up closing without having to spend any money at all at closing. That’s because I’m typically able to negotiate the payment of your closing costs to be handled by the seller. So without a down payment, and without closing costs, you could literally move into your home without having to pay anything but the inspection fees.
So what makes you eligible to take advantage of a VA home loan? Well, it depends on what type of military service you are/were in. Generally speaking, you’re eligible for a VA home loan if you’ve served for at least 90 days in active duty during wartime, and up to 24 months of active duty during peacetime. As for reservists, you will need to meet one of the following criteria: at least 90 days of consecutive active duty under Title 10, at least 90 days of cumulative active duty under Title 32, or at least 6 cumulative years of Honorable Service in the reserves. As for using these benefits after discharge, as long as at least one of the above conditions are met, and you were discharged honorably, you’re able to use those benefits for life. As you can tell, there are a lot of conditions and considerations when it comes to getting a VA loan, so it’s best to discuss this with a lender familiar with VA home loans, who will help you get the information you need to determine if you are eligible. But overall, in most cases, if you’ve served this country, you’re most likely eligible to buy a home with no money down, which gives you as a buyer a huge advantage.
As for what types of homes are eligible for VA buyers, that can vary. Firstly, the home must be your primary residence. You can’t purchase an investment property or vacation home. Because of this, the home needs to be move-in ready. There are certain homes in which their condition would prohibit you from owning it. The idea is that because this home is intended to be your primary residence, and is to be inhabited by you within a reasonable time (typically 60 days), the home can’t be a major fixer upper - within reason. Any issues of safety or liveability would need to be addressed before you take ownership. That said, if a home is dated, but technically liveable and safe, you could still buy yourself a fixer upper and build your home into what you want. There are also many condo communities that are ineligible for VA home loans, as well as certain mobile and manufactured homes. The best thing that you can do is work with a real estate agent that has extensive knowledge, experience, and training in working with active duty and veteran home buyers. They’ll take care to only show you homes that are eligible for the loan that you’re getting. The good news is that most homes would have no problem with VA eligibility.
In short, there are huge benefits to buying your home using the VA loan that you have earned through your service to this country. In order to best take advantage of these benefits, you’ll want to find a real estate agent and a loan officer with extensive knowledge of these types of transactions to help you out. There are specific designations that realtors can earn through training and experience that sets them above the rest and shows you that they’re an expert in this field. Don’t be afraid to ask your agent about any VA-related designations they may have.
