Buying a house can be a painstaking pursuit that gouges your bank account. There are many hoops to jump through, and loan limits often prevent people from getting the home they truly want. However, if you’re a veteran, you get a few perks in this regard.
Since 2019, military vets don’t have to pay money down for a home loan, and they do not have loan limits, making it much easier to get the dwelling of your dreams.
Loan Limits, Entitlements; Mortgage Insurance
Restrictions and limits on loans often prevent most people from getting a house, and V.A. loans remove this hassle. You will get the most amount possible while not having to make a down payment. However, it will depend on whether you have full or partial entitlement.
There will be some limitations with partial entitlements. But, even still, you can pay no money down as long as you have the necessary qualifications.
What’s more, you won’t have to provide mortgage insurance when applying for a loan. This is because the U.S. government has a partial guarantee behind every Veteran’s Affair’s (V.A.) loan, so there’s no need to get mortgage insurance.
All first-time V.A. borrowers and those who’ve repaid a previous V.A. loan receive the full entitlement. You can have this status if you intend to sell a home paid for with V.A. loan money and are going to purchase another home. This means you don’t have to pay any money down, even if housing costs are high.
The max amount you’ll receive for those with full entitlement is 25% of your loan amount. The total amount of the loan doesn’t matter either. In other words, you can get a good house in markets where homes often have a high price tag. Places like Washington D.C., San Diego, and New York City will be more of a possibility than if you didn’t have these entitlements.
Partial entitlement is when your entitlement contains part of another loan, and you want to maintain it. This means loan limits come into play, and the most you receive can’t be more than 25% of the total loan. But, a no down payment is still possible if your entitlement is at the very least %25.
About Your Monthly Payment
However, even though there are many perks with these entitlements, your overall monthly payment will be higher than the average. Therefore, you will want to use a V.A. loan calculator to get a more accurate estimate.
To give you an idea about what this may mean, let’s use an example. Say your home loan is for $250,000. For a 30-year fixed mortgage with a 4% interest rate, you’ll pay $1,113 per month, whereas the average civilian would pay $870.
But the fact that you won’t have to put any initial money down is something most people don’t receive. So, essentially, your down payment becomes part of your payments.
Making a Down Payment
Of course, having no down payment is an option for you on the table. You are allowed to make a down payment even if you have full entitlement. However, a down payment will become essential for those with a partial entitlement, and their loan puts them over their allowed loan limit.
Since down payments can be expensive, having entitlements takes the pressure off. As long as you qualify, you have the chance to get this kind of loan. It can be the determining factor between getting your dream home or settling with what you can afford.