VA Mortgage Calculators & Loans: What You Should Know
One of the rewards of military service in the US is the ability to make use of the VA Loan Program to finance the purchase of a new home. However, there are a lot of special details that go into how VA loans work, above and beyond the usual complexities of regular mortgages. Today we want to talk to you not only about VA home loans, but also about VA loan calculators. A VA home loan calculator can be a great tool in helping you determine how much house you can afford.
What is a VA loan?
A VA loan is a mortgage loan in the United States that is guaranteed by the United States Department of Veterans Affairs, or “VA”. This program is used by US military veterans or their spouses to buy various home properties. To be eligible for a VA loan, there are some technical standards you should know.
Servicemembers usually must meet these eligibility requirements:
- A servicemember must serve as an active duty member of the armed forces for 90 days as of July 2020.
- A servicemember must have a minimum income from a variety of sources to be able to meet monthly loan payments. This can include social security income, retirement income, child support, alimony, and several other sources.
- While the VA does not mandate a credit score, most lenders who participate in the VA loan program require a credit score of at least 620.
VA loans pros and cons
Like any kind of loan product, there are pros and cons to taking out a VA loan as opposed to another kind of loan product. These are a few examples:
Con: Funding Fee
The VA charges what is known as a “funding fee”, a charge used to offset the costs of the program. The funding fee is a percentage of the loan based on factors such as your branch of service, whether or not you are a first time borrower or a repeat borrower, and how much of a down payment you are paying. Consult with your realtor for details.
Con: VA Loan Amount vs Cost of Your Home
Because of the funding fee and other factors, your loan might be larger than the cost of your home. To help prevent this downside, you can apply for grants to cover parts of these costs, ask your lender to cover these costs as part of the mortgage, provide a down payment, or purchase a home that is below its appraised value.
Pro: No private mortgage insurance (PMI)
Since the loan is guaranteed by the government, there is no need for loan insurance of any kind. Lenders require PMI for borrowers who cannot produce a down payment of at least 20 percent. This benefit is another huge plus for servicemember borrowers.
Pro: No Minimum Credit Score
While various lenders may require a minimum credit score, the VA does not. This lets borrowers with low credit scores shop around for a more favorable loan.
Pro: Limits on closing costs
The VA mandates limits on various kinds of closing costs, such as title fees, appraisal fees, loan discount points, and loan origination fees. You should check with your realtor about these details to learn more.
Pro: No Down Payment
This is one of the biggest advantages of the VA loan program. Qualified service members can borrow as much as a lender is willing to lend to them, without necessitating any kind of down payment. This is a great pro when compared to private loans, which may require a 5 to 7 percent down payment, or an FHA loan, which can require between 3 and 4 percent.
What is a VA mortgage calculator? Why do I need one?
There are a lot of complex factors that go into any mortgage. A VA mortgage calculator can help you determine various facts about your VA mortgage. These include:
- Current principal and interest paid
- Homeowners Association costs
- Property Taxes
A VA loan mortgage calculator can help you estimate your total monthly VA loan payment. This is crucial to determine if a VA mortgage can fit into your monthly budget.
Realtor vs VA Mortgage Calculator
When looking to learn more about taking out a VA loan, you shouldn't have to decide whether to ask a realtor or just use a mortgage calculator — you should use both! An experienced realtor is one of the best allies you can have in a quest to acquire a VA loan. There are realtors who specialize in working with veterans and service members to leverage all the value from their VA loan benefit. After using a VA loan calculator, a realtor can help you interpret the numbers and come up with the best home buying strategy.
Calculating the Use of Your VA Loan Benefit
Your time in military service earned you your VA loan benefit. You deserve to have that benefit maximized so that you can get the home you deserve. A VA loan rates calculator can be a great tool to understand where you start.
Reach out to us to learn more! We would be happy to answer any questions you may have about VA loans and VA finance calculators. As expert realtors specializing in Philadelphia’s best suburbs, we can find the perfect home for your exact situation.
Janis Peterson, REALTOR®, GRI, ABR, SRES, CSP
Main Line Homes Luxury Real Estate Agent