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VA Loans in California

Conforming loans tend to have the best loan terms and the best interest rates, resulting in a lower monthly payment. However, the standards are a bit higher for who qualifies. If you have strong credit and a low debt-to-income, then you may benefit from a conventional conforming coventional loan.

VA loans are specifically designed to help veterans and active-duty service members achieve the dream of home ownership. If you're considering using a VA loan to purchase a home, we have provided some of our most asked questions below.

Here’s what you should know about VA loans:

What is a VA loan?

A VA loan is a mortgage loan available through a program established by the U.S. Department of Veterans Affairs (VA) (previously the Veterans Administration). With VA loans, veterans, service members, and their surviving spouses can purchase homes with little to no down payment and no private mortgage insurance and generally get a competitive interest rate.

While the VA determines who qualifies for a VA loan, they don't directly issue the loans. VA loans are considered non-conforming loans because they don't follow the guidelines set by conventional lenders like Fannie Mae and Freddie Mac. However, this flexibility makes it easier for borrowers to qualify, thanks to lower credit score requirements. 

Who is eligible for a VA home loan?

You are likely eligible for a VA mortgage if:
  • You’re an active-duty military member, veteran or surviving spouse 

  • You have a Certificate of Eligibility

  • You meet the lender’s requirements for credit and income. The VA doesn't set a minimum credit score for VA loans, but lenders can set their own minimum standards. The lender will also consider your income and debts to evaluate your ability to repay the mortgage.

  • The property you want to buy meets safety standards and building codes and will be your primary residence. Borrowers are typically required to occupy the residence within 60 days, though this may be extended to 12 months under certain circumstances.

Pros and Cons of a VA Loan

Pros of a VA Loan
1. No down payment or mortgage insurance required
  • Other loan types require down payments and can include an extra cost for mortgage insurance. FHA loans require mortgage insurance regardless of the down payment amount, and conventional loans usually require mortgage insurance if the down payment is less than 20%.

2. Lower rates
  • VA loans usually have lower rates than conventional mortgages.

3. Limited closing costs
  • Closing costs are the various fees and expenses you pay to get a mortgage. The Department of Veterans Affairs limits the lender's origination fee to no more than 1% of the loan amount and prohibits lenders from charging some other closing costs.

4. Assumability
  • This means that when you’re ready to sell your home, you have the option of allowing the buyer to take over your existing mortgage. This can be a selling point if your rate is lower than the current average mortgage rate. 
Cons of a VA Loan
1. VA loan funding fee
  • Although VA loans don't require mortgage insurance, they come with an extra cost called a funding fee. The fee is set by the federal government and covers the cost of foreclosing if a borrower defaults. As of April 7, 2023, the fee ranges from 1.25% to 3.3% of the loan, depending on your down payment and whether it’s your first VA loan. You can pay the fee upfront or fold it into the loan.

2. Purchase loans are only for primary homes
  • You can't use a VA loan to buy an investment property or a vacation home.

3. Not all properties are eligible
  • A VA-approved appraiser will evaluate the home you want to buy to estimate the value and make sure it meets minimum property requirements. Some fixer-uppers may not meet the VA's minimum standards.

How many times can I use a VA loan?

If you have used a VA Loan before, you are eligible to use it again. This is because the VA does not have a limit on the number of times you can use this benefit. You can use it multiple times to purchase different properties if you meet certain eligibility criteria. The VA has specific rules and regulations that govern their loan programs. One of the essential requirements that you must meet is that you must have paid off your first VA Loan before you can apply for a second one. The VA also requires that you have enough financial stability to cover the proposed loan amount.

Is a VA loan right for you?

VA loans are an EXCELLENT option for veterans and active-duty service members who are looking to purchase a home.

Know exactly what to expect from your home loan.

Get a free loan quote and leave the guesswork behind.

It all starts with a conversation.  No commitment.    No hidden costs. 

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