What is a VA Loan? | VA Loan Limits | VA Loan Rates | How Many Times Can You Use a VA Loan?
VA Loan Qualifications | Types of VA Loans | How to Get a VA Loan?
TYPES OF VA LOANS GRIFFIN SPECIALIZES IN
VA Purchase Loan
Purchase a home with no down payment and lower interest rates with a VA purchase loan available for current service members and veterans.
VA Cash-Out Refinance
Turn your home’s equity into cash by refinancing with a VA cash-out loan. Your original home loan doesn’t need to be a VA loan to qualify.
VA Streamline Refinance
Refinance your original VA home loan with a VA streamline refinance loan to lower your interest rate and save money on your mortgage payments.
What Is a VA Loan?
A VA loan is a mortgage that is backed by the Department of Veteran Affairs, commonly referred to as the “VA”. VA home loans originated in 1944 as part of the original Servicemen’s Readjustment Act, also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to offer housing and assistance to veterans and their families, making the dream of home ownership a reality for millions of veterans.
VA Home Loan Benefits
There are many benefits to pursuing a VA home loan as opposed to a traditional mortgage. Primarily, VA home loans:
- Do not require a down payment
- Have lower interest rates than traditional financing
- Are backed by the Department of Veterans Affairs
- Do not need private mortgage insurance
- Have more flexible loan requirements
- Only require limited closing costs
- Have no penalty fee if you pay off your home loan early
- Allow you to sell your home or refinance without restrictions
- Can be used to purchase a home, condo, duplex, and other types of properties
- Allow for the funding fee to be financed with the loan (or sometimes waived completely)
- Are assumable, meaning they can be transferred to a VA-eligible buyer
- Can have a non-spouse family member added for VA joint loans
- Cashout up to 90% of the home’s value (100% in some cases)
Since VA home loans do not require monthly mortgage insurance (MI) and offer more favorable terms, they are usually more affordable. As such, borrowers are better able to focus on paying off debt and other financial obligations.
How Does a VA Home Loan Work?
VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home. The Department of Veteran Affairs guarantees a portion of the home loan. This guarantee acts as an alternative to the traditional down payment, which is typically required to help protect the lender if a borrower defaults on the loan. This guarantee is also known as an entitlement, which works as a substitute for a down payment.
There are two parts to the VA entitlement:
- Basic Entitlement: The VA will insure up to 25% of loan amounts up to $144,000 or $36,000, whichever amount is less. Unless you live in a fairly affordable part of the country, you will likely need to use both your basic entitlement and your bonus entitlement.
- Bonus Entitlement: The VA will insure up to 25% of loan amounts between $144,000 to the current conforming loan limit in your county which is established by the Federal Housing Finance Agency. Bonus entitlements are used when the cost of a home is over $144,000. They also serve as a secondary layer of protection should you default on your mortgage.
What Is the Maximum Amount for a VA Loan?
Generally speaking, the maximum amount for a VA loan varies per each borrower’s circumstances. The VA does not limit the maximum amount you can borrow for a VA home loan. However, there may be a limit on how high of a loan you can qualify for without a down payment. These limits are based on your entitlement:
VA Loan Limits
- If you still have your full loan entitlement, there are no longer loan limits.
- If you have not restored the part of your entitlement that you used to purchase your current home, you will be held to the Federal Housing Finance Agency’s 2022 loan limits.
- If you have previously defaulted on a VA home loan, you will be held to the current loan limits.
Typically, you can borrow up to four times your entitlement amount. When both the basic entitlement and bonus entitlement are utilized, you can qualify for a loan of $484,350, or in some cases, more. While these amounts are standardized, the loan limit and entitlements may be greater in high-cost areas. To determine the maximum amount you can use a VA loan for, you need to look at the 2020 loan limit for the county you plan to purchase in, while considering the above factors.
There is also the Blue Water Navy Vietnam Veterans Act of 2019 to consider, which has authorized changes to VA home loans as of January 1, 2020. Under the Act, qualifying veterans can now purchase a home valued up to $1,500,000 with zero down payment.
For all qualifying VA home loan applications moving forward, the following will apply:
- Maximum $3,000,000 loan amount
- Minimum 700 FICO for loan amounts greater than $1,000,000
- Full 25% guarantee from entitlement required
- Manual underwriting not allowed for loan amounts exceed FHFA conforming
To learn more about this legislation and how it can impact your VA loan, review the VA’s page that covers the changes to benefits.
Keep in mind that if you live in a county with low housing costs and do not need to use the entirety of your entitlement, you can use it toward your next down payment if you sell this home and move. Since VA loan limits change, it can be difficult to be fully informed. Our knowledgeable loan officers can provide further clarification on how VA home loans work.
VA Loan Interest Rates
With the added security of backing from the Department of Veteran Affairs, interest rates on VA loan rates are typically lower than those for other types of home loans. When it comes to understanding your interest rate on your VA loan, there are a few key points to keep in mind:
VA Loan Rates
- Mortgage lenders set their interest rates, not the VA.
- Your interest rate is based on personal factors like your income and credit score.
- The interest rate on your VA purchase loan or VA loan refinance will also depend on the length of the loan.
- Current market conditions can impact loan interest rates, meaning that rates can change frequently.
- Interest rates may vary depending on the type of VA loan you’re applying for.
Griffin Funding offers competitive interest rates that can help you save money over the course of your loan.
How Many Times Can You Use a VA Loan?
There is no limit to the number of times you can use a VA loan entitlement. If you qualify for the VA loan program, it is a life-long benefit that you will be able to enjoy. That said, there are some stipulations for using your VA loan. As mentioned above, you typically need to restore your entitlement before you can use it for another VA home loan—meaning you pay off the remaining balance of your mortgage.
However, there is an exception that allows you to have two VA home loans at the same time—reassignment. If you are required to relocate for PCS, you may be able to retain your primary residence that the original VA loan was used for and use the remaining entitlement to purchase a residence in the new location.
Are VA Home Loans Only Available for Purchasing a Home?
In addition to VA home loans that help you purchase a house, you can also refinance your current VA loan or another mortgage loan. VA loans can also be used to build, repair, and adapt your home.
Who Qualifies for a VA Home Loan?
You may be eligible for a VA home loan if you:
- Are a veteran, current service member, or a surviving spouse
- Have obtained a Certificate of Eligibility (COE)
- Have a minimum 580 FICO score
- Meet income qualifications
While this is the most basic criteria, there are a variety of additional VA home loan requirements regarding both applicants and the desired property. Delve deeper by reviewing our full breakdown of VA loan eligibility.
Is a VA Home Loan Worth It?
Determining whether a VA home loan is worthwhile depends on your individual circumstances. As with all home-buying decisions, committing to a mortgage is a personal decision.
That said, both the short-term and long-term VA home loan benefits cannot be understated. From having more available income to afford current expenses, to being able to pay off debt and increase savings over the course of the loan, you are likely to be in a much better financial position if you secure a VA home loan or VA refinance loan with Griffin Funding.
Types of VA Loans
At Griffin Funding, we provide several types of VA loans including:
A VA purchase loan is the type of loan you would want to use if you’re buying a new home. These loans are typically ideal for qualifying veterans or service members because they can help you purchase a home with better terms—especially if you’re having trouble finding other financing options.
A VA cash-out refinance loan gives qualified veterans the opportunity to refinance their conventional or VA loan into a lower rate while extracting cash from the home’s equity. A VA cash-out refinance loan replaces your existing mortgage instead of complementing it. Qualified homeowners can choose to refinance up to 90 percent of their home’s value for mortgage debt, or refinance a lower percentage and use the cash to cover debt payments and other needs. Refinancing up to 100 percent of the home’s value is available at higher interest rates.
A VA streamline refinance loan, or interest rate reduction refinance loan (IRRRL), is one of the best options for homeowners who already have a VA Loan and would like to refinance into a lower monthly mortgage rate. This refinance type is relatively easy and can be completed quickly, due to the fact that homeowners are refinancing from one VA Loan product to another. With this type of refinance, there are several prominent advantages, including no required appraisal in some cases, no pest inspection, no income qualification, no need to obtain another Certificate of Eligibility, and little to no out-of-pocket costs.
How Can a VA Mortgage Refinance Help Me?
A home refinance loan can not only improve your current rate and terms, but can give you a chance to change the type of loan you are in, increasing your loan payoff time.
Refinancing your home loan enables you to replace your existing home loan with a new home loan that features better terms while giving you the opportunity to get cash back from the equity you have built in your home. Using the equity in your home is a powerful way to help you improve your overall financial well-being and pay off high-interest loans, debts, and credit cards.
How Do You Get a VA Home Loan?
It can seem overwhelming trying to figure out how to get a VA home loan, however, the process is fairly straightforward:
- Secure your COE from the VA or have Griffin Funding do it for you..
- Contact Griffin Funding so that one of our loan officers can evaluate your eligibility and provide you with a quote.
- Submit your application, sign disclosures, and provide any necessary documentation.
- Schedule a VA appraisal and ensure a pest inspection is performed.
- Review your final loan documents and have them notarized.
- Receive funding for your loan. (VA purchase loans receive same-day funding but a VA refinance loan will be subject to a three-day waiting period.)
At Griffin Funding, it is our goal to complete all of these steps within 30 days or less.
Where We Lend VA Loans
Griffin Funding lends VA loans in several states to help service members and veterans find a home in their ideal location. Learn more about VA home loans in your desired state of residence:
- Arizona VA loans
- California VA loans
- Colorado VA loans
- Connecticut VA loans
- Florida VA loans
- Georgia VA loans
- Hawaii VA loans
- Idaho VA loans
- Maryland VA loans
- Michigan VA loans
- Montana VA loans
- Nevada VA loans
- New Mexico VA loans
- North Carolina VA loans
- Oregon VA loans
- South Carolina VA loans
- Tennessee VA loans
- Texas VA loans
- Virginia VA loans
- Washington State VA loans
Our team can help you understand the requirements and specifications of VA loans in these regions.
Learn More About VA Home Loans
It’s important that you have a thorough understanding of VA home loans before moving forward with your application. For more info on Griffin Funding VA loans, speak with one of our loan specialists who will be happy to provide clarity, or you can use the following resources:
Apply for a VA Loan
Ready to apply for a VA purchase or refinance loan? Submit an application online or speak with a loan officer today by calling (855) 394-8288. At Griffin Funding, we consider it a privilege to serve veterans and look forward to helping you find the right VA loan for your needs.