For first time VA home buyers, the journey to homeownership has some unique advantages. The VA Loan, a standout government program, offers significant benefits over nearly all other mortgage loans available, and eligibility extends to active-duty military, veterans, and surviving spouses.
What should a first time VA home buyer know to successfully navigate the home purchasing process? Look to understand the VA loan benefits, find out whether you meet the eligibility requirements, and consider working with Homes for Heroes for expert guidance and additional savings after closing on a home.
When you are first time homebuyers in a competitive housing market, any help is welcome. The combination of volatile house prices and down payments and points and closing costs can combine to make you crazy. Add to that the complications of living in one place and trying to buy a first home in a new city–which is often the case with active-duty service members going from base to base–and your stress levels can build.
The first time home buyer VA loan program can help alleviate many of the sources of stress in your journey to find a new home. Likewise, we at Homes for Heroes, want to make it easy for you to find your dream home. Our program works with the VA home loan program to streamline the process of house hunting. While they cover things like down payments, interest rates and mortgage insurance, Homes for Heroes can help by pairing you with a real estate specialist, connect you with a mortgage specialist, who are both committed to serving our military heroes. On top of the VA loan benefits, working with our Homes for Heroes local specialists can save you an average of $3,000 after closing on a home.
The most encouraging thing about the benefits of the loan program sponsored by The U.S. Department of Veterans Affairs is that the more you dig, the more you find. So hold on to your hat, because this is what the VA Loan Program can do for you.
That’s a pretty long list of benefits, for both active duty military members and eligible veterans.
Buying your first home is an exciting milestone in life. As a first-time homebuyer you may be wondering if you can use special first-timer programs along with a VA loan to make homeownership more affordable. The short answer is yes you can combine VA loans with some first-time homebuyer perks. Let’s take a closer look.
What is a First-Time Home Buyer?
The term “first-time homebuyer” generally refers to someone who has not owned a home in the past three years. There are various federal, state, and local programs aimed at helping first-time buyers, as they often face extra challenges like
- Having little money saved for a down payment
- Struggling to qualify for a mortgage due to short or no credit history
- Not understanding the complex home buying process
Some common first-time homebuyer benefits include:
- Down payment assistance programs
- Reduced mortgage insurance
- Tax credits like the Mortgage Credit Certificate (MCC)
- Special mortgage rates and terms
These programs make buying a home more feasible for new buyers Now let’s look at how first-timer perks can be combined with VA loans
Can You Use First-Time Homebuyer Programs With A VA Loan?
Yes, VA loans can typically be combined with other first-time buyer incentives like the ones mentioned above.
For example, you may qualify for down payment help through state or local programs to supplement your VA-backed purchase. Many areas offer grants, silent second mortgages, and forgivable loans to cover your down payment and closing costs.
You can also benefit from mortgage tax credits when using a VA loan. The federal Mortgage Credit Certificate (MCC) program gives qualified first-time buyers a tax credit each year, reducing your federal income tax liability.
Some lenders offer special discounted interest rates for first-timers, which you could potentially get on a VA purchase too. Shop around to see what deals may be available in your area.
The main thing to keep in mind is that any additional assistance program cannot cancel out the unique VA loan requirements. For instance:
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The VA funding fee still applies when buying your first home. This upfront fee helps the VA operate the loan program.
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You can’t be required to make a down payment, even if a down payment program you use has a minimum contribution. The beauty of VA loans is they require no down payment at all.
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VA loans don’t charge monthly mortgage insurance premiums. So you can’t be required to pay MI on your first mortgage, which is common with conventional loans for buyers with less than 20% down.
As long as these key VA loan benefits remain intact, you can stack additional first-time homebuyer incentives on top to maximize your purchasing power.
Two Special Cases To Know About
While VA buyers can utilize most first-timer programs, there are two important exceptions:
1. FHA loans – You cannot use FHA financing in combination with the VA home loan benefit. FHA loans are only for non-veterans, so any buyer eligible for VA would use one or the other.
2. USDA loans – The U.S. Department of Agriculture (USDA) has special loans to help low-income buyers in rural areas. These require no down payment. Since zero down payment is already a feature of VA loans, buyers cannot use both.
Outside of these two exceptions, VA purchase loans deliver their advantages regardless of your first-time buyer status.
Tips for First-Time Homebuyers Using VA Loans
If you’re buying your initial home with a VA-backed mortgage, keep these tips in mind:
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Get fully pre-approved – Having a pre-approval letter from a lender will make your offer more appealing to sellers. Shoot for full underwriting approval rather than just pre-qualification.
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Know your budget – Crunch the numbers on your income, debts, and expenses. This will determine how much house you can safely afford with a VA loan. Don’t max out your borrowing power.
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Check down payment programs – Research what’s available in your state and city to help with your down payment and closing costs. Free down payment help could stretch your budget.
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Talk to a VA loan expert – Consult a VA-specialized loan officer to discuss the nuances. Veteran home loans have unique rules.
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Move fast – The housing market is still competitive in many areas. Be prepared to act decisively on a home you love. Know your VA financing is pre-arranged.
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Inspect before buying – Hire a home inspector to avoid expensive surprises. First-timers aren’t always savvy about potential property issues.
With proper preparation, you can leverage VA home loan benefits plus first-time buyer incentives to purchase the home of your dreams!
Frequently Asked Questions
Can I use a VA loan more than once?
Yes, you can reuse your VA eligibility multiple times if you qualify. VA loans can be used to purchase another home after selling the previous one. Refinancing into a lower rate VA loan is also an option.
What are some pros and cons of VA loans?
Pros include no down payment, no monthly mortgage insurance, more relaxed credit guidelines, and the ability to negotiate seller contributions. Potential cons are the VA funding fee and stricter property guidelines from VA appraisers.
Do I have to be a first-time buyer to get a VA loan?
No, VA loans are not only for first-time buyers. You can be a repeat buyer and still qualify. VA loans are all about your military status and service history, not whether you’ve owned a home before.
What VA loan fees apply to first-time buyers?
First-time buyers using a VA loan typically have to pay the VA funding fee. But it can be rolled into the loan instead of paid upfront. VA appraisal and recording fees also apply for first-timers and repeat buyers.
Where can I get help buying with a VA loan?
Start with an experienced VA lender who can guide you through the steps. Non-profit agencies like HUD also approve housing counselors who are well-versed in VA loans and assist buyers for free.
Buying that first place to call your own is a huge accomplishment. With proper preparation and research, VA financing can make the dream of homeownership a reality.
Financial Eligibility for First Time VA Home Buyers
The VA loan program is actually a guarantee program. The actual money for the mortgage comes from private lenders and mortgage brokers. The VA insures the loan so the private lender has the confidence to give you the mortgage. The federal government is essentially standing behind you, which reduces the risk for the mortgage company. That means you will still need to provide some additional information to the loan officer who is going to give you the money. Work with your real estate agent and lender to figure out what you will need. Here are some of the most common documents requested:
- Certificate of Eligibility from the VA
- Bank statements
- W-2s
- Tax returns
Even though the Veterans Administration determines the eligibility for VA loans, your private mortgage lenders may have other conditions you will need to land your home loan. They may, for example, have different credit score requirements or tighter debt-to -income ratios.
Our Homes for Heroes lenders are skilled in VA loans, and they know the process well. There is no obligation for signing up, just savings for you, the first-time buyer.
Eligibility Requirements for First Time VA Home Buyers
With all the benefits associated with the VA financing, your next question may be: Am I eligible? It’s important to remember the VA home loan benefit is for service members in the following branches:
- Army
- Navy
- Marine Corps
- Air Force
- Space Force
- National Guard
- Veterans
- Coast Guard
- Reserve members
It’s also available to surviving spouses of military service members. Generally, as a veteran first time home buyer, if you served at least 24 continuous months in the armed forces, you probably qualify. There is a long list of dates and length of service requirements, but it’s pretty easy to figure out. There are also some variations based on whether you were an officer or an enlisted member.
If you are an active-duty service member, you qualify for VA mortgages if you have served for 90 days continuous service.
The next step is to apply for a Certificate of Eligibility (COE). The form itself is only one page. When you are certified, you can apply for loans under the VA loan program.