While those are some of the more common effective incomes, other types of military income https://paydayloansohio.net/cities/somerset/, such as subsistence and clothing allowances, hazard pay, overseas pay, imminent danger pay, and more may also be counted.
11. Variety of VA Loan Types
Many Veterans are surprised to hear how many financing options the VA loan benefit has. Not only can Veterans purchase a home with their VA loan benefit, but they can also make energy-efficient upgrades, take equity out of their home and refinance into lower interest rates.
VA purchase loans are one of the most commonly used financing options by Veterans. Veterans use this type of loan to purchase a primary residence.
VA IRRRL loans, sometimes referred to as a VA Streamline refinance, are an excellent option for Veterans who want to lock into a lower interest rate or refinance out of an adjustable-rate VA loan. This option is only for Veterans with active VA loans.
VA Cashout Refinance
A VA Cash-Out refinance is for Veterans who want to take equity out of their home in return for cash. VA loan holders can use this money to pay off debts, make home improvements, or in case of emergency. Veterans can use this option to refinance non-VA mortgages.
VA Energy Efficient Mortgage (EEM)
VA EEMs are an option that Veteran homebuyers have to potentially reduce the costs of their utilities. Investing in energy-efficient upgrades at the onset of purchasing your home can ultimately lower heating, cooling, and other energy-related expenses in the future. Homeowners may be able to finance qualified energy-efficiency improvements into their loan.
12. No Loan Limits
While VA loan limits used to be enforced for all Veteran homebuyers, that is no longer the case. Now, Veterans with their full VA loan entitlement can borrower as much as they can afford without the need for a down payment.
Previously, these county-level limits helped determine how much Veterans could buy before this zero-down loan program required a down payment. However, the VA loan limits still come into play for Veterans with diminished entitlement. In these cases, Veterans who want to purchase above where their entitlement caps out must put down a quarter of the difference between that figure and the home’s purchase price.
The VA Funding Fee is a required governmental fee applied to every VA loan. The money goes directly to the VA to help cover any losses and keep the VA loan guaranty running. While most borrowers pay between 2.3 percent and 3.6 percent, some Veterans are exempt altogether.
- Veterans who receive compensation for service-connected disabilities
- Veterans who would receive disability compensation if they didn’t receive retirement pay
- Veterans rated as eligible to receive compensation based on a pre-discharge exam or review
- Veterans who can but are not receiving compensation because they’re on active duty
- Active duty Purple Heart recipients
- Surviving spouses who are eligible for a VA loan
VA loan assumability is not something many homebuyers think of when it comes to benefits, but it is still a compelling benefit of the VA loan program. A VA loan assumption is a purchase transaction where the purchaser takes over the seller’s existing mortgage.
- Buyers can assume the seller’s interest rate, which is a great selling point if it is lower than current market conditions.
- Most closing costs aren’t included when the loan is assumed
- Non-Veterans can assume the loan, but that does not free up the Veteran’s VA loan entitlement on the property
- Veterans can save their VA loan entitlement if the person assuming the loan is also a qualified Veteran and signs a Substitution of Entitlement.