Buying a home with a loan from the Department of Veterans Affairs (a VA Loan) can be a little bit more complicated than buying with a traditional mortgage — but the benefits are often worth the extra paperwork.
Whether you’re active duty or a veteran, you can benefit from federal programs that make loan rates competitive and allow you to buy a home with as little as 0% down.
According to the VA, “VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you.” The loan limits vary by county and state — for all Northern Virginia areas and counties plus the District of Columbia, the VA loan limit for purchases in 2017 is $636,150. Any amount above that limit requires a down payment of 25 percent of the difference.
Here’s an example:
If the home purchase price is $715,000 — that’s $78,850 above the VA loan limit.
You would be required to make a minimum down payment of 25% of that $78,850 difference, which is $19,712.
There are funding fees associated with VA loans. Calculating your funding fees can be done by taking the loan amount and multiplying it by a certain percentage determined by your situation. These percentages range from 1.25% to 3.3% and depend on the size of your down payment, whether you are activity duty or a veteran, or a reservist or National Guard member, and whether this is your first home purchase with a VA loan or your second.
You do not have to pay the fee if you are a:
- Veteran receiving VA compensation for a service-connected disability, or
- Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, or
- Surviving spouse of a veteran who died in service or from a service-connected disability
We can walk you through the VA loan process, including recommending mortgage lenders and service providers, helping you understand the paperwork and fees associated with VA loans and more. If you have any specific questions relating to VA loans or the home buying process for military members, please let us know.