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You raised your right hand and swore an oath to go wherever your country needed you, whenever it needed you, without regard to your personal safety or comfort. As a small thank you, the federal government extends one of the best home loan options available for all qualifying Veterans. It is a sad truth that far too many Veterans and their families don’t fully understand the benefits of a VA home loan and therefore do not take advantage of it. In today’s post, we will review just a few of the best benefits of VA home loans.

Danny Delgado and his real estate brokerage team at Guaranteed Rate in Naperville are well-versed in the qualifications, requirements, and benefits of VA home loans and are here to help you discover your benefits. If you are a Veteran looking to purchase or refinance a home in the Chicago area, give our team a call to get started today.

As you will see, the benefits of using a VA home loan are grand and may seem too good for the debtor for any creditor to assume. So why would a lender approve a VA home loan? Because it is guaranteed by the federal government. The lender is guaranteed to get their money even if the loan holder defaults on their loan. The benefits we discuss are able to be so great because they are very low risk.

No Down Payment

One of the biggest benefits of using a VA loan is that you are exempt from putting up a downpayment. The federal government is well aware that service members are paid the minimum salary required to live because they provide almost everything else you need. This leaves you with little to save at the end of each month, making saving 20% for your family’s home a near impossibility. Because your home loan is federally funded and backed by a Veterans Affairs guarantee, lenders are more apt to fulfill your loan requests without a downpayment, knocking down a chunk of the principal right out the gate.

For most traditional home loans, purchasers are expected to pay between 10 and 20 percent of the total cost of the home as a down payment. The VA fronts the down payment as a VA funding fee.

Capped Closing Costs

Eliminating all closing costs is impossible, but VA loan guidelines place a cap on what a buyer can pay in closing costs. Homebuyers are able to request sellers to pay all their loan-related closing costs and up to four percent of other costs, including taxes and insurance. In some cases where costs cannot be waived, they may be rolled into the final mortgage, and the VA will cover the closing costs to the seller. Either way, you will have little to no cash due at closing.

Relaxed Credit Score and Debt-to-Income Ratio Requirements

For conventional home loans and other more traditional mortgages, credit scores and debt-to-income ratios (DTI) are the gold standards for decision making. The lower the credit score and the higher the DTI, the higher the down payment requirement or the less likely a lender is to approve the loan request. However, VA home loans only require a 620 credit score and 41 percent DTI, but both are negotiable to 580 and 55 percent respectively, based on other factors.

Foreclosure and Bankruptcy Protection

The VA doesn’t want to assume your mortgage any more than you want to lose your home. For this reason, the VA makes every effort to assist you in preventing foreclosure on your home or bankruptcy as a result of overwhelming mortgage debt. And, on the flip side, Veterans who have faced foreclosure or bankruptcy in the past are not prohibited from obtaining a new VA loan. This is dramatically different from most other home loan options where either a previous foreclosure or bankruptcy would result in automatic denial of a mortgage loan application.

VA home loans are among the best in terms of buyer benefits. If you are a Veteran, it is worth looking into whether or not you are eligible and getting the specifics on what you qualify for. You may be surprised to find that your dream home is closer than you think! Danny Delgado and his team are here to help you navigate your benefits and turn your dreams into reality. Contact us to get started today!