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February
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What You Need to Know About VA Loans in 2021

VA Loan Tips

Are you an active or retired military member with your eye on one of the wonderful St. Louis homes for sale? Uncle Sam wants to help make your dream of homeownership come true. Our real estate agents share significant changes to the VA loan program taking effect in 2021 and how they benefit you.

What Is a VA Loan?

Before reviewing the changes, it's helpful to clarify what constitutes a VA loan and how it differs from other mortgages. First of all, only active service members, veterans, and eligible surviving spouses can apply for a VA loan.

Some people mistakenly believe funding for the loans actually comes from the Department of Veterans Affairs or VA. Private institutions, such as banks and mortgage companies, are still the ones issuing the loans. The difference is that the VA guarantees a portion of the loan, making it easier for the borrower to obtain more favorable terms.

Benefits of VA Loans

If you're looking at some great Washington homes for sale with the intent of using a VA loan, you still have to go through the traditional steps: Get prequalified and preapproved, make an offer, have the home appraised, and complete the closing.

Here are the ways a VA loan truly works to your advantage:

  • You can obtain a VA loan without a down payment. Many people cite the difficulty of saving for a down payment as the biggest obstacle toward purchasing a home.

  • Mortgage insurance is a requirement for home loans secured with less than 20 percent down. Even without a down payment, mortgage insurance is not attached to VA loans thanks to the VA's guarantee.

  • VA loans are not a one-time-only deal. You can use your VA entitlement for home purchases throughout your lifetime. Keep in mind, though, that VA loans are meant to buy a primary residence in "move-in ready" condition.

  • Previous foreclosures or bankruptcies don't preclude eligibility for VA loans.

  • There's no prepayment penalty for VA loans, so you can save money by making additional payments and retiring the loan early.

What's New in 2021

So what are the specific changes to the VA loan program going forward in 2021?

  • Until this year, National Guard members, including reservists, had to have at least 90 days of active duty to qualify for a VA loan. Under a new law, members are eligible with 90 days of service. The one caveat is that at least 30 of those days must be consecutive.

  • There is no cap to the amount of money a home buyer may borrow under a VA loan. Previously, however, limits were set to how much the VA would guarantee without a down payment. Those limits have now been eliminated for those with full VA loan entitlement. While this affects many VA loan applicants, there are two instances where VA loan limits still apply. One is in the case of those who have previously defaulted on a VA loan. The other is with homeowners who have one or more VA loans currently active.

Ready to start your search for a new home? Contact us at Coldwell Banker Premier Group to get started.

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