A Guide to Veterans' Benefits for Home Ownership
The homebuying market is tough, but if you're a veteran searching for a new home, you may be able to use a VA loan. However, not all lenders are familiar with VA loans, and not all homes qualify. Understanding the process of buying a home using veterans' benefits can help as you begin the process.
Benefits of Using a VA Loan to Buy a Home
The VA loan is one of the best home lending options in the United States, but many veterans do not utilize it. Perhaps some veterans are concerned about red tape or are not familiar with all the benefits of a VA loan.
VA loans allow eligible veterans to purchase homes when they may not be qualified for a conventional loan. VA loans are backed by the US Department of Veteran Affairs (VA), although private lenders issue them. Many veterans choose to use VA loans when they purchase a home because they can often secure lower interest rates and qualify for a more expensive home than they would without using a VA loan.
Many veterans are unable to save a down payment to purchase a home. Luckily, the primary benefit of a VA loan is that it makes it easier to secure financing with no down payment. Veterans can also qualify for VA loans with lower credit scores and income than are required with conventional loans. Finally, veterans may be able to avoid paying Private Mortgage Insurance (PMI) since the VA guarantees more than 20% of the total value of the home loan.
How to Buy a House as a Veteran With a VA Loan
The exact underwriting and loan approval process for your VA loan depends on your specific mortgage lender. However, you can usually expect the process to take between four and six weeks. You must submit your VA loan application and include all requested documentation. Your loan officer will work with you to address any issues or concerns that could occur along the way. Additionally, you may also need to make sure a VA-approved appraiser appraises the home you're purchasing and that it meets specific safety requirements.
At closing, you must pay your VA funding fee, a one-time payment on the VA loan. Many veterans choose to roll this expense into the loan balance. Remember that VA loans are one of the only types of mortgages requiring a funding fee. Most other mortgages require mortgage insurance.
Renovating a Home With a VA Loan
Veterans can also renovate a home using a VA loan. A VA renovation loan allows a person to purchase a home and fund its rehabilitation and renovation at once. For example, suppose you would like to refinance your existing mortgage to fund repairs or upgrades to your home. In that case, you can choose to pursue a VA renovation loan. These types of loans are somewhat flexible, but they can only be used on specific types of renovation projects. You should make sure your project is on the list before you pursue a VA renovation loan.
Other Home-Buying Options for Veterans
Using the GI Bill
Veterans may be able to use the G.I. bill to help fund their home purchases. The G.I. The bill was intended to provide service members returning from active duty with education and training so they could begin civilian life again. The G.I. Bill provides veterans money for tuition and educational fees and a monthly housing allowance while they attend school.
Some lenders may consider a person's G.I. Bill housing allowance when deciding whether they qualify to purchase a home. However, most lenders will want to see long-term, consistent income to prove that the applicant does have the capability to pay their home loan. You could move into a rental property that costs less than your monthly housing allowance and save the leftover money toward a down payment.
Special Housing Adaptation Grant
Veterans can use Special Housing Adaptation Grants to build, buy, or update their permanent place of residence to accommodate a service-related disability. They can apply for up to three different grants. To qualify, you or your spouse needed to have suffered one of the following types of service-related injuries:
- Blindness in both eyes
- Severe respiratory or breathing injuries
- Severe burns
- Loss (or use of) both hands
Specially Adapted Housing Grant
If you are living in a permanent residence or a temporary home, you may be able to use a specially-adapted housing grant to increase the accessibility of the home. These grants can offer a substantial amount of money in assistance. You’ll need to show that you have a service-related disability and that you own or will own a home or temporarily live in a family member's home.
State-Based Military Home-Buying Assistance Programs
In addition to learning about federal housing benefit programs, you should also look into home-buying assistance programs your state may offer veterans. Many states, including Texas, Oklahoma, California, and others, offer veteran and military home-buying assistance programs. For example, the Texas State Affordable Housing Corporation offers veterans down payment assistance.