Dear Claire: What is a Veterans Administration (VA) Home Loan?
Unlocking the Benefits of VA Loans: No Down Payment, No Mortgage Insurance
A Veterans Administration (VA) loan is only for people who have served in the military and who are veterans. These loans typically give you a free interest rate and you can put very little down or almost well, next to nothing down, and there’s no mortgage insurance.
Typically, on a conventional loan if you were to go out and just get a normal old everyday loan, you would be getting a conventional loan, there are limits on how much your loan can be — the total amount of money it can be. Your loan limits in Portland, Oregon, for a conventional loan, are around $510,000. Normally, back in the day, VA loans abided by those same loan limits. What I found out recently is that in January, the VA decided to lift those loan limits based on a mathematical calculation about your entitlement, which is complicated and is going to be dependent on the person and what their service was.
You might actually be able to get a loan for significantly more than that if you want to and have a VA loan with no mortgage insurance with a fantastic interest rate, which is really hard to find right now. They have not made any end date on this program, so for right now, you could get a zero-down loan that’s guaranteed by the Veterans Administration with no mortgage insurance.
Let me explain mortgage insurance. If you’re putting less than 20% down on a purchase, then you’re required to have mortgage insurance because it ensures the lender that if something should happen and you don’t make your payments, they will be reimbursed through mortgage insurance. In this case, for a VA loan, the Veterans Administration is actually standing in as you more. And that’s why you can put as little as zero down and still get a fantastic VA loan with technically no mortgage insurance on it.
There is a complicated mathematical equation to figure out exactly what your service was, and what you would actually qualify for. Of course, you’re going to have to qualify on income and assets and all the typical things that you have to qualify for on any loan. But it lowers the bar significantly because you could put almost nothing down and own your own home. You have to live in it, and it can’t be an investment property unless you’re living in one side and renting out the other. You can do that, and the house must be in good shape. You can’t choose a house that needs a lot of work because they want it to be in good shape for you to live in.
If you have any other questions that you would like me to talk about, please contact me at [email protected] and I’ll be happy to address them. Remember to subscribe to our Paris Group Realty, LLC channel to access all kinds of additional information that we have posted there. I hope you have a wonderful week, and I will see you all soon. You take care.
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