Buying a home can be a difficult proposition for most non-Veteran Californian’s. The biggest hurdle to buying a home in California is the down payment. But this is where California Veterans have a big advantage over non-Veterans, because the VA loan program eliminates the need for a down payment. The VA mortgage is an amazing program that has helped Veterans across the country purchase homes. The VA doesn’t fund the loans but acts as an insurer or guarantor to reduce the risk for VA approved lenders. Since the VA guarantees a portion of the loan (25% of the loan), VA approved lenders in California are able to fund loans with no down payment and competitive interest rates.
No Down Payment Required up to County Loan Limit
The best thing that can be said about the VA mortgage program is that there is no down payment required. Based on the county VA loan limits that the VA announces each year, a California Veteran can purchase a home with $0 down payment. This enables Veterans to save thousands of dollars out of pocket while qualifying to purchase a home.
No PMI on VA Loans
Another big benefit for California Veterans that can save them thousands of dollars over the life of the loan is that there is no Private Mortgage Insurance (PMI) required. With other types of home financing that are used by non-Veterans, when there is a down payment less than 20%, PMI is required. This is designed to protect lenders against the risk of the borrower defaulting. Since the VA guarantee 25% of the VA loan, there is no need for lenders to require PMI. With no PMI, California Veterans can save hundred’s of dollars a month and thousands over the life of the loan.
Competitive Interest Rates on VA Loans
VA loans also tend to have lower interest rates when compared to Conventional programs for non-Veterans. VA loans tend to have interest rates that are anywhere from .125% to .5% lower than Conventional programs, depending on factors like FICO score and loan to value. Lower interest rates means veterans will save thousands of dollars over the life of the loan. Lower interest rates is also a big reason why the VA program may be better for a Veteran than a Conventional loan, even when the Veteran has a down payment of 20% or more. It makes sense to always include VA financing in your loan comparison analysis no matter how much down payment will be used.
Underwriting and Credit Flexibility on VA Loans
On top of these benefits, the VA program doesn’t have a prepayment penalty and also has more flexible underwriting and credit guidelines than other types of home loan programs. The VA program has provided the ability for thousands of California Veterans to be able to get a loan for a home that wouldn’t have been able to otherwise. When it comes to securing financing for a home, in most cases the VA loan is the best option for California Veterans.
The first step in determining whether you qualify for a VA loan is a quick phone call to your trusted California VA Loan Specialist. After a 5 minute consultation the VA loan specialist should have enough information to prepare custom loan scenarios and then can carefully educate you on the numbers to make sure you stay within your budget.
Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.CaliforniaVALoanExpert.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.