Another year, another increase in the conforming loan limits for Alameda County (and most of…
This article explains seven key benefits of using a VA loan to buy a home in California. It has been fully updated for 2017. The biggest benefit is that you could purchase a house with no down payment, and possibly without paying mortgage insurance. But there are other noteworthy advantages as well. Let’s explore them.
7 VA Loan Benefits for California Home Buyers
The VA loan program provides home buyers with access to low-cost financing. When using this type of mortgage to buy a home in California, borrowers are able to finance 100% of the purchase. This is the primary benefit of using a VA loan to buy a house in 2017, and it’s a benefit you won’t find anywhere else.
Here’s a more complete list of benefits:
Benefit #1: You can buy a home with no down payment.
We just touched on what is arguably the biggest benefit of California VA loans. The programs offers 100% financing for eligible home buyers. In other words, it allows you to buy a house with no down payment whatsoever. This is a unique advantage given to our nation’s military members and veterans.
Benefit #2: You could avoid paying mortgage insurance.
This is another major benefit of using a VA loan, and it could save you a lot of money. VA borrowers typically do not have to pay a monthly mortgage insurance premium.
In contrast, FHA-insured home loans come with both an upfront and an annual mortgage insurance premium. Likewise, conventional mortgages with down payments below 20% usually require private mortgage insurance. The benefit of using a California VA loan is that borrowers can typically qualify for 100% financing without mortgage insurance.
Benefit #3: Seller concessions and gifts could reduce your closing costs.
This program allows sellers to contribute money toward the home buyer’s closing costs. This gives you, the buyer, greater flexibility when negotiating the terms of your purchase agreement. It could also save you a lot of money.
Additionally, you can ask the seller to pay up to 4% of the purchase price, as a concession. The seller is not required to make these concessions, but you can negotiate it. It’s another benefit to using a VA loan when buying a home in California.
As an alternative, you could also use gift money from a family member or close friend. The point is that there’s a lot of flexibility built into this program.
Benefit #4: VA loans offer competitive interest rates.
VA home loans are partially guaranteed by the U.S. government. As a result of this government backing, mortgage lenders are able to offer highly competitive interest rates on VA loans.
The actual interest rate you receive will partly depend on your credit score and other factors. But even so, borrowers who use VA loans often find that the rates are lower than they would be for a conventional mortgage. (Contact us directly is you would like a rate quote.)
Benefit #5: Va loans are assumable in many cases.
VA loans are often assumable, subject to approval from the loan servicer. An “assumable” mortgage is one that can be taken over by a new homeowner. So, if you sell the house down the road, the buyer could essentially step in to take over your mortgage payments.
This added benefit of VA loans could help you attract a buyer some day. But, as noted, it must be approved by the loan servicer in most cases. By contrast, conventional home loans (those that are not backed by the government) are generally not assumable.
Benefit #6: You don’t need perfect credit to qualify.
Credit scores are an important part of the mortgage qualification and approval process. These three-digit numbers show how well (or how poorly) you have repaid your debts in the past. A higher score can improve your chances of qualifying for mortgage financing. A lower score could have the opposite effect.
Credit requirements for VA loans are generally more relaxed when compared to conventional mortgages. The bottom line is that you don’t need perfect credit to qualify for this program. This is a major benefit to using a VA loan when buying a house in California.
Benefit #7: Debt-to-income ratio requirements are flexible.
Regardless of what type of home loan you use, you’ll need to have a healthy balance between your monthly income and your recurring debts. This is true for FHA, VA and conventional mortgage programs.
With that being said, the debt-to-income requirements for VA loans are often more flexible than those used for conventional mortgages. This is similar to VA loan benefit #6 (credit scores) in the sense that it could make it easier for you to qualify.
Ready to Move Forward?
Are you a military member or veteran? Do you plan to use a VA loan to buy a house in California? If so, we can help. Bridgepoint Funding has been helping home buyers in California for more than 16 years. We are particularly passionate about the VA mortgage program, because it rewards the brave men and women who serve our country.
We can help you take advantage of these and other VA loan benefits when buying a home in California. We can even pre-approve you for a mortgage, to give you a much-needed advantage in the real estate market.
Please contact us today with any questions you have, or to apply for the program.