VA Loans for First-Time Home Buyers
Serving your country in the military can make you eligible for a VA loan, a home financing option that comes with a number of valuable benefits. That’s why we encourage both present and former service members to consider VA loans as they weigh their home financing options.
VA loans for first-time buyers can potentially save you a lot of money when you purchase a home. When you take out a VA loan, no down payment is required and you can secure competitive rates and terms. But that isn’t where the savings stop. Below is some important information about getting a VA loan as a first-time home buyer.
- What Is a VA Loan?
- How Does a VA Loan Work?
- Benefits of VA Loans for First-Time Home Buyers
- How to Get a VA Loan as a First-Time Home Buyer
- First-Time Home Buyer VA Loan Qualification Requirements
- Choose an Experienced VA Lender
What Is a VA Loan?
The U.S. Department of Veterans Affairs (VA) offers military veterans and service members (as well as their surviving spouses) special mortgage loans, otherwise known as VA loans. These VA loans for first-time home buyers are secured by the Department of Veterans Affairs, thereby enabling lenders to offer VA loans to first-time home buyers with no down payment and low rates.
How Does a VA Loan Work?
Unlike many traditional mortgages, borrowers who are eligible for a first-time home buyer VA loan can get 100% of the financing for the home they choose. Or, if they don’t like the real estate market options, that same funding can go towards a newly built home.
For veterans who have a service connected disability that requires special access into and inside the home, a VA loan can provide the necessary funds for repairs and remodels. They can even be used to refinance a home at a more favorable interest rate, allowing borrowers to cut down on their payment and save money.
VA loans have the backing from the Department of Veterans Affairs. This means that if the borrower defaults on their loan, the VA will step in and pay the lender a significant portion of the loan amount. Because of this additional security, private lenders are more willing to extend credit to borrowers without requiring a down payment.
Griffin Funding offers the following types of VA loans:
- VA purchase loans to buy, build, or improve the home you already own.
- VA streamline refinance loans are useful when interest rates drop, allowing homeowners to refinance at lower rates.
- VA cash-out refinance loans are great for tapping into the equity in your home when emergencies pop up or you need to improve cash flow.
Private lending institutions are the ones who offer the actual loans — not the VA. But because their loans to their home-buying clients are backed by the VA, Griffin Funding can offer far more favorable terms than most civilian clients will ever see.
Benefits of VA Loans for First-Time Home Buyers
One of the biggest barriers to homeownership is the often hefty down payment that first-time home buyers must have when seeking funding. First-time home buyers aren’t entering the process with proceeds from a former home they have already sold. In fact, they could be cash-strapped, even if the veteran and their spouse are working two full-time jobs.
But down payments are not required for qualified applicants seeking VA loans. That is a major hurdle military personnel and veterans can dodge. Below are some additional benefits to take into account when considering a VA home loan as a first-time home buyer:
- Less than perfect credit? No problem. Building a decent credit score can take years. One credit ding can throw a wrench into your home-buying plans. Griffin Funding offers flexible qualification requirements and competitive VA loan rates to help veterans, active service members, and their surviving spouses find the homes of their dreams.
- Save on funding fees. Disabled veterans and surviving spouses who qualify for VA loans often have to pay no funding fees whatsoever. For service members who don’t qualify for the above exemptions, funding fees can range from 1.4% to 3.6%.
- No need for private mortgage insurance (PMI). Civilian home buyers who provide a down payment of less than 20% typically must purchase PMI. The cost of that added fee can bump your mortgage payment. Luckily, VA loans don’t require private mortgage insurance.
How to Get a VA Loan as a First-Time Home Buyer
Here at Griffin Funding, we don’t want our clients to experience any unpleasant surprises during the home-buying process or at closing. We can schedule an in-person or telephone consultation so you can learn more about the application and financing process and get a quote.
Information that will be considered when you apply for a VA loan as a first-time home buyer include:
- Credit score
- Monthly take-home pay
- Down payment amount
- Your debt-to-income ratio
Once these parameters are established, the experts at Griffin Funding can offer various financing options and provide quotes. The more choices that you have, the better your chances are of making the right financing decision.
First-Time Home Buyer VA Loan Qualification Requirements
If you are an active-duty military service member, a veteran, or the surviving spouse of a veteran who otherwise qualifies for the loan, you may apply for a VA loan and buy your first home for you and your family. However, this home must be occupied full-time as your primary residence. You cannot apply for a VA loan for a rental or investment property.
In order to qualify, you also have to apply for and obtain a Certificate of Eligibility (COE). This can often be done quickly by the veteran or service member. There could be some delay in verification for surviving spouses, so factor that timeframe into your home-buying timeline.
Other requirements necessary in order to get approved for a VA loan include:
- VA appraisal
- Pest inspection
- Income validation
- Credit score of 500 or higher
Not sure if you are eligible for a VA loan as a first-time home buyer? In that case, the loan professionals at Griffin Funding can offer you a few tips that can help you as a first-time buyer using a VA loan.
Improve Your Credit
Improving your credit is certainly possible, but it can be a slow process. Before you even begin looking at properties on the real estate market, pay off—or at least significantly lower—your outstanding debts. Do some belt-tightening to reduce your monthly expenditures. Seek financial guidance for drawing up a monthly budget — then stick to it!
While the VA and its approved lenders tend to be more lenient when it comes to credit requirements for VA loans, there are still minimum standards that must be met before any loans are approved.
Don’t Take On Additional Debt
Shred those credit card applications that come unsolicited in the mail. Make repairs to older model cars and forgo updating to a newer model. Keep your eye on the prize — a new home for you and your loved ones.
Should You Pre-Approved?
By getting pre-approved, you can streamline the process of purchasing a home. Your VA home loan lender can review your financial metrics, employment status, and credit history. If they spot some red flags, you can resolve any potential issues before devoting too much time to house hunting.
Once your application is in order and you are satisfied with your credit score and DTI, you can get pre-approved for a VA home loan. After getting pre-approved, you will get a better idea of how much you can really afford.
Choose an Experienced VA Lender
Griffin Funding is very experienced when it comes to providing VA loans to first-time home buyers. Our loan originators are intimately familiar with the ins and outs of VA home loans. They can expertly guide you through the loan application process and help you get into the home of your dreams as quickly as possible.
At Griffin Funding, we offer fair loan terms and competitive rates to all borrowers. We are proud to serve the men and women who served this country by providing VA loans at low rates. Make your dream of homeownership come true by reaching out to our team today or filling out a quick online application.