VA loans are hands-down the best mortgage product on the market. They require zero down payment, and are lenient about credit scores and income levels. It’s no wonder that about 10% of all home-purchase loans are completed with a VA loan, according to loan software provider Ellie Mae. This VA mortgage calculator shows your buying power when you use this powerful loan product. Because of zero down payment and no monthly mortgage insurance, you might be surprised how much you can afford.Verify your VA loan eligibility (Oct 1st, 2020)
*You could save up to $3,000 in interest payments by comparing rates from multiple lendersRequest Rates
VA loans are typically available to those who meet the following qualifications:
These are general guidelines, however, and home shoppers should get a full qualification check and pre-approval letter from a VA lender. Many buyers are eligible, but don’t know it yet.Verify your VA loan eligibility (Oct 1st, 2020)
The above VA mortgage calculator details costs associated with VA loans or with home buying in general. But many buyers don’t know why each cost exists. Below are descriptions of each cost.
Principal and interest. This is the amount that goes toward paying off the loan balance plus the interest due each month. This remains constant for the life of your fixed-rate loan.
Property tax. The county or municipality in which the home is located charges a certain amount per year in taxes. This cost is split into 12 installments and collected each month with your mortgage payment. Your lender collects this fee because the county can seize a home if property taxes are not paid. The calculator estimates property taxes based on averages from tax-rates.org.
Homeowners insurance. Lenders require you to insure your home from fire and other damages. This fee is collected with your mortgage payment, and the lender sends the payment to your insurance company each year.
HOA/other. If you are buying a condo or a home in a Planned Unit Development (PUD), you may need to pay homeowners association (HOA) dues. Lenders factor in this cost when determining your ratios. (See an explanation of debt-to-income ratios above). You may put in other home-related fees such as flood insurance in this field, but don’t include things like utility costs.
Funding fee. The Department of Veterans Affairs charges a fee when the loan is opened. The fee is wrapped into the loan amount, but can be paid in cash if the veteran desires. The fee goes toward supporting the VA loan program. VA insures lenders against loss when they issue VA loans. That’s why lenders are able to offer a zero-down loan at such a low rate.
Funding fee percentage. The funding fee amount is reflected as a percentage of the loan amount. It varies based on down payment and whether you’ve used a VA loan before. The fee ranges from zero (for service-disabled veterans) to 3.6% (for a repeat use of the VA loan benefit). See the chart below.
Loan term. The number of years it takes to pay off the loan (assuming no additional principal payments). VA loans are typically 30 or 15 years.
Service type: VA funding fees used to vary based on the type of military service the borrower performed. But thanks to VA loan changes in 2020, all new borrowers pay the same fees based on their down payment and whether or not they’ve used the program before. A few select classes of VA borrowers are exempt from the funding fee.
VA loan use. Higher funding fees apply if you have used a VA loan to purchase or refinance property before.
Down payment. This is the dollar amount you put toward your home cost. VA requires no down payment, but one can be made if the applicant desires. The down payment can come from a down payment gift or eligible assistance program.
Interest rate. The mortgage rate your lender charges. Shop at least three lenders to find the best rate.
Below is a chart of VA funding fees when purchasing a home.
|Type of Military Service||Down Payment||Fee for First-Time Use||Fee for Subsequent Use|
|Active Duty, Reserves, and National Guard||None||2.3%||3.6%|
|5% or more||1.65%||1.65%|
|10% or more||1.4%||1.4%|
VA loan limits used to be more or less the same as conventional loan limits. However, starting January 1, 2020, those limits have been repealed. VA-eligible borrowers can now get 100% financing on any home price — as long as they qualify for the loan based on factors like credit, income, and debt.
Learning about VA loans is easy. See our VA loan guide for everything you need to know about the program. Additionally, see our other articles on this powerful loan program.
Home buyers with military experience are checking into VA loans because of their fantastic benefits. Many veterans are eligible and able t0 buy now; many just don’t know it yet.
Check your eligibility now, and become a homeowner with zero down payment and at an affordable monthly cost.Verify your VA loan eligibility (Oct 1st, 2020)
Property tax averages: http://www.tax-rates.org/taxtables/property-tax-by-state
VA funding fees: http://www.benefits.va.gove/homeloans