Use this calculator to help estimate the monthly payments on a VA home loan. Enter your closing date, the sale price, your military status & quickly see the monthly costs of buying a home. Please remember that this is an estimate, the actual fees and expenses may change depending on a variety of factors including the actual closing date, your military status & if you finance your funding fee. Below is a summary of the inputs and calculations used to create this estimate.
The fifth section of the calculator [Loan costs] contains multiple important variables for veterans. Namely it lists VA status, loan use & if the funding fee is financed in the loan. By default these are set to active duty/retired military, first time use & funding fee financed.
You can also edit any of the other variables in the calculator. For sections that are minimized by default, please click on the dropper in the upper right section to expand them. Once you are done with your calculations you can click on the [View Report] button to bring up a detailed report about your loan. Once you are in the active report view you can click the [Print] button to create a printer friendly version of your results.
For your convenience here is a table listing current local interest rates. You can use these rates to estimate the price of various mortgage loan products.
The G.I. Bill of 1944 is where the VA Loan Guaranty Program originated. This sweeping bill made several provisions for returning veterans of World War II. Its ultimate goal was to thank those individuals for their service to their country, and to help them get on with their lives. Considering that their lives were put on hold in many ways due to their military service, the bill was designed to give them a helping hand. The VA Loan Guaranty Program aimed to make housing affordable for returning GIs.
Through the VA Loan Guaranty Program, veterans and active military personnel were able to qualify for home loans through qualified lenders. The U.S. government backed up a certain portion of those loans, guaranteeing them and, essentially, vouching for those who took them out. One of the most important aspects of how the government achieved that was by insuring the property that was being financed on the GIs' behalves. For that reason, there was no need for those who qualified for VA loans to take out private mortgage insurance - a benefit that would add up to significant savings down the line.
The G.I. Bill was enormously popular and successful; the many perks and benefits that it afforded to United States military personnel and veterans were the impetus for that popularity. Few parts of the bill were met with more enthusiasm than the VA home loan provisions. Since being introduced, VA home loans have been quite popular and have helped thousands upon thousands of military personnel to get into affordable homes. If you are qualified to take out a VA home loan, you should seriously consider doing so; some of the main reasons include:
As noted previously, the interest rates for VA home loans are generally quite a bit lower than for traditional mortgage products. In fact, this is one of their major selling points and is the main reason why so many people are sold on them. For people with poor credit, especially, the low interest rates offered through the VA home loan program are very enticing. After all, those with low credit scores generally enjoy the same competitive interest rates that people with topnotch credit scores enjoy. Whether your credit score is 750 or 600, you're going to pay a lot less interest with a VA loan.
Basically, if you want to get a feel for how much a VA home loan will cost in terms of interest, you should just look at what standard, fixed-rate, 30 year mortgages are going for in terms of interest and shave a little bit off of the total. Since rates fluctuate, there is no point in documenting how much you are going to pay in interest for a VA home loan. Suffice it to say that it is generally a great deal less than you would pay for many other popular mortgage products.
The reason VA loans are able to charge a lower rate than other mortgages is the Veteran's Administration guarantees to pay the lender up to 25% of the value of the home, up to the maximum guarantee limit of $424,100 across most of the country. This means if a buyer bought a house for $400,000 & was foreclosed on the VA would cover the lender for any loses up to $100,000.
If you purchase a home valued above the local conforming mortgage limit then you will need to cover the downpayment for the portion of the loan which is above the local limit. For example, in Los Angeles county the maximum conforming loan limit is $636,150. If you were to buy a house for $836,150 with a VA loan then you would need to cover 25% of the loan amount above the limit.
When shopping around for a mortgage, many people wonder if there is a "good time" to apply. For some mortgage products, there is no doubt that key market conditions affect how much they're going to pay. However, there is no tried and true advice for when you should - or shouldn't - apply for a VA home loan. The things that affect the interest rates that are attached to the typical VA home loan are so varied and complex that there is no hard and fast rule to refer to.
If you are considering a VA home loan, contact a number of qualified lenders and ask them what the current rate is. Try to get a feel for whether rates have recently crept up or gone down, and act accordingly. Either way, you're going to be paying a lot less than those who don't qualify for VA loans are going to. Also, without the worry of private mortgage insurance and without having to make a down payment, you're going to be ahead of the game financially anyway. In fact, the relaxed conditions for VA home loans makes any time a good time to get one. The VA loan benefit is flexible and widely used across the country. Here are usage stats for fiscal year 2016.
|Loan Type||Loan Volume||Total Financed||Average Loan|
|IRRRL Streamline Refi||215,559||$55,284,137,342||$256,469|
You'd be hard pressed to find a whole lot of drawbacks to a VA home loan. Assuming you qualify - i.e., that you are an active member of the United States military, or a veteran - then you will quickly see that the pros of such a loan far outweigh the few cons. Still, in order to make the best and most educated decision possible, you should learn about the drawbacks and disadvantages of VA loans. Knowing exactly what you're getting yourself into is always a good idea. In general, the main drawbacks of a VA loan are:
Although they vary depending on where you live in the country, there are limits on how large of a VA home loan you can take out. Those who are looking to purchase a very expensive home, for instance, may be discouraged by the loan limits that are imposed by the VA home loan program. If the home that you want to buy exceeds the loan limits set by the VA home loan program, you will have to finance the balance through another mortgage program. This can seriously negate the benefits of using the VA home loan program. Still, the limit in most areas is currently $729,000; for the vast majority of people, that amount is more than enough for what they are looking at.
One of the biggest worries that prospective home buyers have is paying hidden fees. When figuring out how much you can afford, you need to make sure that you take every single fee and expense into account. Many mortgage programs and home loan products have hidden fees; on the outset, they aren't very obvious. By the time everything is said and done, though, they can increase a borrower's expenses by a considerable margin.
VA home loans are interesting because they don't include a ton of different hidden fees. Still, there are a few that you need to be aware of in order to get the best idea possible about what you can really afford. These fees include:
|Borrower||Down Payment||Funding Fee (1st use)||Subsequent Funding Fee|
|Disabiled 10%+ in Service||Any||0%||0%|
|Regular Military||None||2.15%||3.3% *|
|Regular Military||5 - 10%||1.5%||1.5%|
|Regular Military||10% &Up||1.25%||1.25%|
|Regular Military||Cash Out Refi||2.15%||3.3%|
|Reservist & National Guard||None||2.4%||3.3% *|
|Reservist & National Guard||5 - 10%||1.75%||1.75%|
|Reservist & National Guard||10% &Up||1.5%||1.5%|
|Reservist & National Guard||Cash Out Refi||2.4%||3.3%|
|Regular Military, Reservist & National Guard||IRRRLs||0.5%||0.5%|
|Regular Military, Reservist & National Guard||Manufactured Homes||1.0%||1.0%|
|Regular Military, Reservist & National Guard||Loan Assumptions||0.5%||0.5%|
* The higher subsequent use fee does not apply to these types of loans if the Veteran's only prior use of entitlement was for a manufactured home loan.
Source: Funding Fee Table [PDF] on benefits.va.gov, citing Public Law 112-56, signed November 21, 2011
As the name implies, the VA home loan program is reserved for veterans and active members of the United States military. In order to qualify, then, you or your spouse must have either served at least two years of active duty for the United States military, or must currently be enlisted. The entire scope of the U.S. military is included in the program, which means that members of the U.S. Army, Navy, Marine Corps, Air Force and Coast Guard are all eligible for this program.
There is no way to even be considered for a VA home loan if you haven't actively served in the U.S. military. Even if you have served, if it was for less than two years then you are not going to qualify. During periods of war, active personnel must have served for at least 90 days to qualify. Also, if you are no longer enlisted, your discharge can be for any reason other than dishonorable in order to qualify. As long as all of these criteria are met, you should have no problem securing a VA home loan.
Acquiring a VA home loan involves a relatively straightforward, simple process. Before going ahead with it, though, you should familiarize yourself with what you're going to be expected to do. Below, the basic steps for acquiring a VA home loan are outlined for your convenience. Although everyone's experience is going to vary slightly, you can expect yours to go in roughly the following order: