VA Loans: Smart Advantages and 2021 Guidelines

VA Loans are still one of the smartest mortgage options for members of the military and their spouses. If you’re starting 2021 with new financial goals, getting a great mortgage is going to be a big part of your success. And if you’re thinking of refinancing or buying a new home, VA Loans offers some smart benefits: Dream homes, fixer-uppers, and first-time homebuyers included.

So who qualifies? What are the benefits? How much will I need to save for a down payment? Has anything changed for VA Loans in 2021? This quick read will help.

VA Home Loan Advantages and New Guidelines for 2021

VA Loans are government-backed mortgages available through banks and qualified mortgage lenders. Since VA loans are partially guaranteed by the U.S. Department of Veteran’s Affairs, lenders can pass along savings in the form of lower interest rates, lower down payment requirements, and flexible credit score qualifications.

Top Advantages of VA Home Loans

  • No down payment requirements – 0% down
  • No private mortgage insurance (PMI) requirements
  • Lower interest rates than FHA loans and conventional mortgages
  • Lower closing costs
  • Maximum 1% origination fee

Main Types of VA Loans

  • Purchase Mortgage — Secure a VA home loan based on the purchase price of your new home.
  • Cash-out Refinance — Refinance an existing VA loan or conventional loan with the option to cash-out on some of the equity in your home.
  • Streamline Refinance — Refinance an existing VA loan to a lower interest rate and better terms without getting cash out.
  • Renovation Loans — Finance the cost of repairs and home improvements and roll it all into a new VA Loan.

VA Loan Guidelines

As of December 2020, the VA loan no longer has a limit on the purchase price for qualified borrowers. This means that there is no cap on the size of your loan and you can still qualify for a zero down payment. Qualified borrowers will still need to meet income requirements and debt-to-income ratios set by their lender for final loan approval on the amount they’ll be able to borrow.

The VA home loan requires a funding fee (0.5 – 3.6%) for home purchases and refinances. Veterans Affairs sets this fee which helps make the loans available to all qualified service members and eligible spouses. The funding fee is a one-time fee and can often be rolled into the loan.

Who Qualifies for a VA Loan

Qualifying for a VA Loan is a fairly straightforward process. You’ll need a VA certificate of eligibility (COE) before the loan closes, which you can request from the U.S. Department of Veteran’s Affairs.

VA Loan Eligibility

  • Active-duty service members and veterans who meet minimum service requirements
  • Surviving spouses of qualifying service members and veterans
  • Eligible members of the National Guard and Reserves

Finally, make sure you work with a VA-approved mortgage lender. Working with an experienced mortgage lender can help you save time and money. A VA mortgage expert can help gather required certificates if needed and put together a custom loan package to make sure you get every advantage available to you.

Taking Action

VA Loans are still one of the smartest mortgage options for members of the military. If you think you qualify for a VA home loan, connect to a loan advisor and make 2021 the year you reach your financial goals. Working with an experienced mortgage broker can make a big difference. We can help.