What You Need to Know About VA Loans in Port Aransas

If you’re a veteran of the U.S. Armed Forces, you’re most likely eligible for a VA loan.

Unfortunately, many people aren’t aware of all the benefits that go along with a loan backed by the Veterans Adminstration—or even how they work.

VA Loans: The Basics

It’s not exactly accurate to call it a VA loan. The funding doesn’t actually come from the Veterans Administration; it comes from a private lender. We call it a VA loan because the VA guarantees a portion of it. (That includes the VA reassuring lenders that if you default on your loan, the lender can go to the Veterans Administration to recoup their investment.)

Benefits of VA Loans

If you choose to use a VA loan, the benefits include:

No down payment required, as long as the home’s sale price doesn’t exceed its appraised value
No private mortgage insurance premium requirements (most people have to pay PMI if they’re putting down anything less than a 20 percent down payment)
The VA limits how much the lender can charge you for closing costs
Sellers are permitted to pay your closing costs
Lenders can’t charge you an early repayment penalty if you pay off your house before the length of the mortgage is up

Finally, if you run into trouble making your mortgage payments, the VA may be able to help you.

The Maximum Debt Ratio for VA Loans

There isn’t a maximum debt-to-income ratio for a VA loan. The lender does have to provide the VA with “compensating factors” if your DTI is over 41 percent, though. Many lenders have a maximum DTI, and in some cases, it’s lower than 41 percent.

Minimum Credit Scores for a VA Loan

The Veterans Administration does not have a minimum credit score requirement. Many lenders do, however.

Lenders must look at a veteran’s entire financial profile before making a lending decision, even if the vet’s credit isn’t as high as what the bank would typically require.