VA Loan | L3 Home Lending

VA Mortgage Loans

A VA mortgage loan is a home loan that is guaranteed by the U.S. Department of Veterans Affairs. A VA loan makes it easier for veterans, active duty military members and eligible surviving spouses to purchase or refinance their home because it typically doesn’t require a down payment.*

The VA offers this benefit to honor the service and enhance the lives of those who have served or are serving their country. The flexible VA mortgage loan guidelines make homeownership more attainable for active service members, vets and surviving spouses who might not qualify or who might not see loan terms as favorable with a Conventional loan.

*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits.

Highlights

No prepayment penalties
No private mortgage insurance (PMI)
100% financing with full VA entitlement*
Fixed- and adjustable-rate mortgages
VA financing fees can be lumped into the total loan amount
A variety of eligible property types, including townhomes and VA-approved condos

VA Loan FAQs

Even if you put no money down, there is no private mortgage insurance (PMI) when you use a VA loan to buy your home. You will instead have to pay a VA funding fee, which you can pay up front at closing or it can be rolled into and financed as part of the total loan amount.

In some cases, the seller may elect to pay or the buyer’s and seller’s real estate agents may negotiate to have the seller cover the VA funding fee.

The funding fee is calculated as a percentage of your loan amount and is based on what, if any, down payment is associated with the loan. It also factors in whether the veteran associated with the loan is a first-time VA mortgage recipient or has used the VA loan option more than once.

The VA loan allows eligible borrowers to include SOME closing costs into the total loan amount. The VA funding fee is one of the VA loan closing costs that you can choose to roll into the total loan amount.

The other fees that are lumped into closing costs are not eligible to be rolled into the total loan amount, but you and your agent may be able to negotiate additional seller or lender concessions to bring the upfront cost of the loan down.

Before you are granted a VA home loan, you must first obtain a valid Certificate of Eligibility (COE). Your COE is based on your length of service or service commitment, duty status and character of service. Veterans, active-duty personnel and eligible surviving spouses can request their COE from the VA, or your L3 Home Lending mortgage advisor can look it up when you are ready to apply.

Your COE tells your lender whether you have your "full entitlement" available, which means you can buy a home with zero down, or "partial entitlement", which means you would have to make a down payment for your home purchase.

If you have already used a VA loan, you can still take out an additional VA mortgage. However, if you haven’t paid off your last VA home loan, you may only have a partial entitlement, or no entitlement remaining. You would need to pay off the current loan to restore your full entitlement to avoid loan limits and realize all the other great benefits of the VA mortgage loan on your potential second loan.

The minimum VA loan credit score to qualify at L3 Home Lending is 580. For any borrowers whose credit score ranges from 580-599, an additional underwriting approval will be required, which just means that in many cases, additional documentation may be required during the mortgage process.

As always, the higher your credit score, the more favorable the loan terms. Though there is more to your VA loan experience than your credit score!

Make sure you ask your L3 Home Lending mortgage advisor these questions as you go through the mortgage process.

Mortgage Options

Fixed-Rate Mortgage

Fixed-rate mortgages protect you against rising rates since the interest rate remains the same for the entire term of the loan. You can select a 30- or 15-year loan term. The main difference is the 15-year option has higher monthly payments, which also means you are building home equity faster. Keep in mind you can use equity as a down payment for your next home or a future cash-out refinance. If you plan on staying in your home for a longer time frame, a fixed-rate mortgage could be the right solution for you.

Interest Rate Reduction Refinance Loan (IRRRL)

An interest rate reduction refinance loan (IRRRL) may help lower your interest rate and reduce your monthly payments by refinancing your existing VA loan. You can also refinance an adjustable-rate mortgage (ARM) into a fixed-rate mortgage with this option. However, you cannot receive cash from loan proceeds with an IRRRL.

Cash-Out Refinance

If you’re already a homeowner, a cash-out refinance may help you pay for major expenses like college tuition, debt or home improvements. This option allows you to take cash out of your home equity by replacing your current mortgage with a new loan that is more than the amount owed. You can also refinance a non-VA loan into a VA loan with a cash-out refinance.