More and more veterans and military members in Washington State are using VA loans to buy a house. And it’s easy to understand why. This program gives eligible borrowers the chance to buy a house with no down payment, while avoiding mortgage insurance at the same time.
Additionally, mortgage rates are often lower for VA loans than conventional mortgages (on average). If you are a current military member or veteran in Washington State, and you’re thinking about buying a home, you owe it to yourself to look into the VA loan program.
Big Benefits for Military Members and Veterans
According to a report published this week by the Washington Post, more and more veterans and military members are turning to VA loans as a path to homeownership. Last year, approximately 740,000 VA loans were originated nationwide. That was a record number.
There are several reasons for the growing popularity of VA loans among Washington State’s veterans and military members. Here are three of the primary benefits:
1. Lower rates, on average. According to data published by Ellie Mae, a mortgage origination software company, VA loans tend to have lower rates than conventional home loans (that are not insured by the government). In September 2017, for example, the average interest rate assigned to a 30-year fixed VA loan was 3.99%. The average rate for a conventional or “regular” home loan was 4.26%, during that same month. Granted, rates can vary from one borrower to the next due to a number of factors. But on average, VA loans tend to offer lower borrowing costs.
2. No down payment. Washington State veterans and military members who buy a house with a VA loan can often finance 100% of the purchase price. That eliminates the need for a down payment, which is a major benefit for borrowers. Aside from the USDA home loan program for rural residents, there aren’t many 100% financing options available today. This is one of the things that makes the VA home loan program unique.
3. Avoiding mortgage insurance. With a typical home loan, borrowers who make a down payment below 20% usually have to pay for mortgage insurance. This insurance protects the lender but is paid for by the borrower. But with the VA loan program, home buyers can put down little or nothing at all, while also avoiding mortgage insurance in most cases.
Who Can Qualify for a VA Loan in Washington State?
The basic eligibility requirements for VA loans are fairly broad. The program is open to most military members and veterans in Washington State. The general requirements include at least 90 days of active duty service during wartime, or 181 days during peacetime. National Guard and reservists are typically required to serve for six years before they are eligible for the VA loan program, but there are exceptions to this. Please contact us if you have questions about eligibility.
There are limits to how much you can borrow using a VA loan with zero down payment. These loan limits, as they are known, vary by county because they are based on median home prices. In Washington State, the VA loan limit for a single-family home purchase in 2017 ranges from $424,100 to $592,250. Those caps could go up in 2018, due to significant home-price gains during 2017.
Military members and veterans can borrow more than these limits, if their income supports it. But they would likely need to make a down payment of some kind, to offset the higher loan amount. (We’ve covered this in a previous blog post.)