VA Home Loans – Chapter 1

Knowing how VA loans work is the first step toward getting the home of your dreams, but getting qualified is crucially important. Here’s where to start.

  1. No down payment

It’s exceedingly difficult to buy a home these days with no money down. In the face of the recent housing crisis, most conventional lenders will require at least 5 percent (and up to 20 percent) down. FHA loans provide a lower down payment option, at 3.5 percent, but even that figure can be out of reach for some buyers.

Here’s where VA loans soar above the competition.

Even in an era of strict lending, VA loans continue to offer 100 percent financing to qualifying home buyers. These no-money-down loans have connected thousands of military home buyers with dream properties over the years. While always an important benefit of military service, the VA loan program is an incredibly powerful tool in today’s tight lending climate.

  1. No PMI

The VA loan program also frees military borrowers from buying private mortgage insurance (PMI). A portion of each VA loan is backed by the federal government, rendering PMI unnecessary.

Avoiding PMI can generate some serious savings. PMI fees generally range from 0.5 to 1 percent of the total loan amount on an annual basis. The average mortgage amount in February 2016 was $225,463, according to the Mortgage Bankers Association, meaning a typical home buyer could be expected to pay from $1,127 to $2,255 in first-year PMI costs.

The PMI cost for VA loan borrowers? Zero.

  1. Relaxed credit standards

Once happy with any score above 620, most conventional lenders have raised the bar for credit score minimums. The average FICO credit score of successful conventional mortgage applicants in February 2017 was 764, according to mortgage technology firm Ellie Mae.

But borrowers don’t need perfect credit to win VA financing. Most VA lenders still require only a 620 minimum credit score. In an economy fraught with unemployment and souring investments, the relaxed credit standards can be a real boon for military home buyers.

  1. Competitive interest rates

VA loan rates will fluctuate based on the market and the individual borrower. But it’s certainly helpful to know that VA loan rates are competitive with other loan programs, and frequently fall below conventional rates. For more information on current VA loan rates, contact a Bank of the Ozarks Mortgage VA rate specialist at 972-523-8353.

  1. No prepayment penalty

Most buyers aren’t affected by prepayment penalties, but they can be irritating for homeowners who strive to be debt-free. Borrowers who pay off a conventional loan within the first five years could be stunned with a big prepayment penalty, which generally amounts to six months of interest.

Lenders are prohibited from charging prepayment penalties on VA loans. Military buyers are free to pay off a loan before its term ends, without fear of incurring a prepayment penalty.

How buyers can get started

To nab each of these VA home loan benefits, a prospective borrower needs to work closely with an experienced real estate agent and a VA-savvy lender, like Warren Whitaker with Bank of the Ozarks Mortgage. The VA home loan aims to be user-friendly, but specialized knowledge is required, particularly when it comes to the following three issues:

  • Satisfying military service requirements and obtaining a Certificate of Eligibility (COE)
  • Locating a VA-eligible property
  • Receiving lender approval

Want to know more?

If you have questions or to discuss your situation specifically, please give Warren Whitaker a call or TEXT at (972) 523-8353 or send an email to

To start your loan application and get started to home ownership, please CLICK HERE.

VA Home Loans

Chapter 1

Chapter 2

Chapter 3


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