VA Loans are guaranteed by the U.S. Department of Veterans Affairs (VA) and allow veterans and qualified service personnel to obtain home loans. The main advantage of obtaining a VA loan is the minimal, or zero, required down payment. Eligibility for a VA loan is determined by the Department of Veterans Affairs. In order to see if you qualify, service members and veterans must meet the eligibility requirements and obtain a Certificate of Eligibility, or COE.
You can visit VA.gov for up-to-date fee information.
Although down payments are not required on VA loans, a funding fee is charged. VA Loan Guarantees are paid for through a VA funding fee, which represents a certain percentage of the loan amount. The borrower pays a funding fee for the benefit of obtaining a VA home loan, an amount that is between 0.5% and 3.3% of the loan amount. The funding fee amount is dependent upon the loan-to-value, the veteran’s status, and the loan purpose. The funding fee can be included in the total loan amount, so no “out-of-pocket” costs are needed from the borrower, and is waived for veterans disabled during their service. You can view a breakdown of VA funding fees on the Department of Veterans Affairs website http://www.va.gov/.
The VA offers refinance mortgage programs. Interest Rate Reduction Refinance Loans (IRRRLs) have minimum credit qualifying standards and may not require an appraisal. This type of refinance can only be used to refinance an existing VA mortgage in which the mortgage is current. Additionally, the refinance must result in a benefit to the borrower in the form of a lower interest rate, lower monthly payments, a shorter loan term, or a conversion from a variable (ARM) rate to a fixed rate mortgage. Closing costs can be “rolled in” the new loan amount; however, the borrower cannot receive cash back from the transaction.
The VA also offers a full refinance loan that requires credit qualifying and an appraisal, but allows the borrower to receive cash from the transaction. This is called a VA cash-out refinance loan and is subject to a maximum loan to value of 100%.
For more information on VA Loans:
Call us at 410-558-4200 or toll-free at 1-888-561-BANK (2265).
* Only available with an Interest Rate Reduction Refinance Loan (IRRRL) in which the home was previously the borrower's primary residence.