How Do VA Loans Help Veterans?

VA Loans offer exclusive benefits to those who are serving or have served in the military, National Guard, or Reserves, or a surviving spouse of a service member who died as a result of duty. The list of benefits creates what is essentially one of the most affordable and accessible ways to purchase a home. However, VA Loans are more than just an affordability solution- they’re keys to a better future.

If you are an active or former servicemember who is preparing for homeownership, keep the following points in mind as you decide whether to apply for a conventional mortgage or VA Home Loan.   

How the $0 Down Payment Requirement Helps

When being in the service requires you to frequently move around the country, your homeownership journey looks very different. Most homeowners use the wealth they build in the form of equity to take steps toward financial freedom. This growth is typically done over periods of 7-10 years or more before moving onto the next home. 

The thing is, without being in the home long enough before a transfer, many active servicemembers ultimately forgo the traditional process of building enough equity to cover the upfront costs of their next home. This is where the $0 down payment requirement of VA Loans comes into play, bridging the gap between duty and achieving financial freedom. From one home to the next, they can set aside the relatively minimal equity they gain (instead of needing to put it toward the down payment) and climb toward financial freedom just the same.   

How the Low Credit Requirement Helps

As servicemembers become veterans, some are tasked with building credit from the ground up. Entering the military during early adulthood coincides with the time during which one otherwise may have started utilizing lines of credit, slowly increasing their score before getting to the point of financial homeownership preparedness. 

Veterans, on the other hand, may experience the opposite- they’ve financially prepared for homeownership but need time to increase their credit score. The VA Loan credit score requirement is 580, which is lower than any conventional loan program, making home loans more accessible to veterans when they need them.  

How Lower Rates Help

Just as many veterans are faced with the timeline challenge of building credit, entering the workforce as a civilian may also put them in the position of needing to re-climb the income ladder; people often climb the income ladder during young adulthood prior to taking steps toward homeownership. Therefore, they would more likely have a qualifying debt-to-income ratio (DTI), which is a measure of monthly income minus monthly debts. If a veteran is starting over at the bottom of a career path, so to speak, their mortgage payment may be too high in comparison to their income to meet the DTI requirement of a home loan.   

In the face of this challenge, VA Loans provide veterans with a lower interest rate. And a lower interest rate equates to a lower monthly payment, increasing the likelihood of a qualifying DTI.   

How vs. Why  

The challenges described in this article may not be true of some servicemembers and veterans- every situation is unique- and could be challenges that civilians face just as much as servicemembers or veterans but for different reasons. So why do VA Loans exist? Outside of being helpful in specific scenarios, most of all, VA Loans acknowledge and honor those who reserved their time, effort, and duty to serve our country. Widening the path to owning a home and a subsequently brighter financial future is a well-deserved “thank you” to those who protect our freedom. 

Ready to Apply? 

There is a common misconception that VA Loans result in a more complicated or laborious homebuying process. As long as you find the right lender, it’s simply not true. United Home Loans prides itself on having knowledgeable and efficient team members who ensure VA Loan borrowers sail through each step of the process with ease. If you’re ready to talk to a mortgage banker about VA Loans, fill out the form below!