Posted 08/01/2013

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Another 10 Common VA Loan Questions Asked By U.S. Home Buyers And Homeowners

Dan Green

The Mortgage Reports Contributor

VA loans remain popular among eligible home buyers and refinancing households.

Offered by the Department of Veterans Affairs and made possible by the G.I. Bill, VA loans let buyers use 100% financing while eschewing the need for mortgage insurance or other monthly payments. Furthermore, because the loan is government-guaranteed, lenders are willing to be flexible with approval standards which can make it easier to get VA-approved.

For VA-eligible borrowers, here are the answers to 10 popular VA loan questions.

1. What Are The Advantages Of A VA Loan?

There are several advantages to using a VA loan as compared to FHA loans and conventional loans.

One advantage of the VA loan is that it often comes with a lower mortgage rate than comparable loan products from the FHA, Fannie Mae or Freddie Mac, or the USDA, for example. This is because the VA loan is government-guaranteed.

In addition to lower rates, VA loans require no minimum downpayment, no mortgage insurance ever, no prepayment penalty, limited closing costs, plus an assumption feature that allows other VA-eligible borrowers to take over your loan in the event you sell your home.

No other mortgage loan in today's market offers this breadth of benefits.

2. How Much Can I Borrow With A VA Loan?

With a VA loan, there is no limit to the amount you can borrow. This is because there is no such thing as a VA loan limit.

The VA doesn't set a maximum loan amount. Instead, it lets lenders set their own limits. Lender limits often depend on the location of your home, the size of your downpayment (if you make one at all), and several other loan traits. In most U.S. counties, the maximum VA loan size is $453,100. In certain high-cost housing markets like San Francisco, California, you can get a VA loan for as much as $679,650.

The VA sometimes offers these larger, so-called "jumbo" loans at rates comparable to those for conforming mortgages.

3. Can I Shop Around For A VA Loan?

Yes, you can shop around for a VA loan. In fact, the VA encourages you to do so. The VA doesn't directly originate or fund VA loans. Instead, U.S. banks, savings-and-loans, credit unions and other mortgage lenders set their own VA loan rates and fees. Rates will vary by bank -- get today's low VA rates here.

4. Does the VA Loan Have A Prepayment Penalty?

No, VA loans do not have a prepayment penalty. As a VA-backed homeowner, you can sell your home or refinance your VA loan at any time without having to pay a prepayment penalty or early-exit fee. Furthermore, your existing VA loan can be "assumed" by other VA-eligible home buyers.

5. Can I Get a Fixed-Rate VA Loan?

Yes, you can get a fixed-rate VA loan. The VA guarantees both fixed-rate and adjustable-rate mortgages (ARM). If you're unsure of whether a fixed-rate loan or an adjustable one is best for your household, get rates for both and compare.

6. What Are The Minimum Requirements To Get A VA Loan?

To get a VA loan, you'll need to first show that you are VA-eligible. This is accomplished via a Certificate of Eligibility (COE), which you can request from your lender. You should expect to verify income and assets, and to show an acceptable credit history. The VA also requires a certain amount of POST after your monthly bills are paid. Note that a VA-to-VA refinance will not require most of these items.

7. What Closing Costs Will I Have To Pay To Get A VA Loan?

Closing costs for VA loans tend to be lower than the "typical" loan costs of a purchase or refinance. VA borrowers should expect closing costs to cover an appraisal and a title search, the amount of which will vary by state and locale. Other loan costs for underwriting and recording may be required, too, although not always.

The VA limits the costs lenders can charge you for a VA loan. That allows you to save your cash for moving costs, home improvements, furniture or anything else you need or want.

8. Does The VA Charge Fees To Apply For A VA Loan?

No, the VA does not charge a fee to apply for a VA loan, or to check VA mortgage rates. The VA will charge a so-called funding fee at closing, however, which can be financed into your loan amount, so you don't have to pay it with cash or cashier's check. Funding fees vary based on your loan size, your type of military service, the size of your downpayment and other factors.

VA funding fees are waived for veterans who receive VA disability compensation and for unmarried surviving spouses of veterans who died in service or as a result of a service-connected disability.

9. Do I Need A Pre-Approval To Use A VA Loan?

No, you do not need to be pre-approved to use the VA loan program but it helps!

Mortgage lenders often perform free VA pre-approval for home buyers who want them. The pre-approval is simply a preliminary review of your credit scores and history which allows the bank to estimate how much can borrow with a VA loan or loan type. Pre-approval letters can be helpful when shopping for a home because it shows sellers that you can obtain financing for their home.

You can get a pre-approval by starting with a rate quote online.

10. Do I Need A Social Security Number To Get Pre-Approved For A VA Loan?

Yes, your social security number is needed for a pre-approval. This is because your lender will want to review your credit scores to make sure you're VA-eligible. Lenders cannot review credit with a social security number. If you do not wish to share your social security number, you can ask your lender for a pre-qualification letter instead. Pre-qualification is similar to pre-approval, but without the formal verifications.

Get Today's VA Mortgage Rates

Eligible VA borrowers can apply for VA loans or get VA pre-approved online. The process starts with a rate quote, and can be completed within minutes. See how today's low mortgage rates  fit your household budget and how much home you can really afford to buy.

Get started with today's live VA mortgage rates. Click here to get started (Feb 24th, 2018).

Dan Green

The Mortgage Reports Contributor

Dan Green is an expert on topics of money. He has been featured in The Washington Post, MarketWatch, Bloomberg, and others.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2018 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)