As a US Military veteran with at least 6 months of active duty service, you qualify for a VA home mortgage loan in Honolulu. If you are a disabled Veteran, you may qualify for additional home mortgage loan benefits. Understanding the benefits of a VA home mortgage loan, who qualifies for the loan program and how a VA home mortgage loan compares to a conventional loan can help you with determining what type loan is right for you.
Becoming Eligible for a VA Loan
To be eligible for a VA mortgage loan, you need to fall into one of the following categories:
- Served at least 90 days during war time or 181 days during peacetime
- If no longer serving, you received a discharge that was not dishonorable and served for the minimum number of days required
- You are the spouse of a veteran who died during service or due to an injury related to his or her service and you have not remarried
Regardless of which of these categories you fall under, the type of loan you receive from the VA and the benefits it has to offer remains the same.
Qualifying for a VA Loan
If you are eligible for a VA home mortgage loan, the qualification process is far easier than it is for obtaining a conventional loan. This is because a VA mortgage loan is backed by the government, thereby reducing the risk to the lender. Since the VA does not use credit scoring when analyzing your loan application, you can even qualify for a loan despite having had financial difficulties in your past.
Down Payments and VA Home Loans
VA home mortgage loans offer a number of benefits. For example, with a VA loan, you are not required to come up with a down payment on loans of up to $721,050 for the island of Oahu. With a conventional loan, on the other hand, you are generally required to pay a down payment of up to 20 percent of the cost of the home.
Lower Interest and No PMI
Since VA mortgage loans are backed by the government, the lender assumes a lesser risk when providing you with a loan. This typically translates to a more competitive interest rate than conventional loans. To help reduce the risk associated with a conventional loan, lenders also require borrowers to obtain Private Mortgage Insurance when financing more than 80 percent of the home’s value. With a VA mortgage loan, you do not have to obtain this insurance, thereby saving you money.
While there is a VA funding fee,, this fee is still much lower than the cost of Private Mortgage Insurance. Furthermore, if you are a Disabled Veteran, you may qualify to have this fee waived.
Despite the fact that the VA Loan is a federal program, the government typically does not make loans directly to veterans. Rather, you will need to obtain the loan through a private lender. The benefits this program has to offer certainly makes it worth your while to discuss with the lender you are considering for your home mortgage loan.