I'm a Vet and have to move to a permanent job. I'm thinking about buying a home. How do VA home loans work?

You wont find a better loan/loan terms anywhere else.  No down payment required, competitive rates and no PPI required as well.

They are basically guaranteeing to the bank that you will repay

helps you to get better rates etc

You get a certification from the VA that you are eligible.
You find a bank that does VA loans.  Try USAA
You get qualified for a loan through a bank
You buy a home with no money down.
Be prepared to fill out extra paperwork and take extra step and follow more regulations when buying.

An internet search will tell you all you need to know.

The biggest deal is no ppi payments and lower interest  rate. Plus no money down.

Win.

Exactly!!  It's win all the way around.

It's not that hard to buy a home on VA...

Had a real estate agent that constantly showed me trash, then told me that homes I found and kind of liked would "not go VA".
Fired the fucker and got someone who worked her ass off to find me a home that I liked....

Check and see if your state has a housing finance program....I got a VA loan with a much better rate, and the servicing of the loan stays local.
Also, USAA wanted DOUBLE the going rate for an HO5 policy...they could not explain why after hours on the phone.

Get a home inspection...a home inspector saved me from a buying a mold infested money pit....worth the $300 I paid...in some states (like mine) a home inspection is optional.

Even though you don't have to put any money down, sack away at least a few grand to have available for unexpected expenses (home inspections, moving expenses, etc, etc...).

Good deal aside from all the junk mail refi letters.

The VA loan is a awesome deal, no money down and no PMI (primary mortgage insurance).

Even though no down payment required, it will reduce your VA funding fee.  Depending on your budget, a down payment will save you money.

Also shop around, some banks do no charge a processing fee for VA loans.  IE; only fee you pay is funding fee, if you do out of pocket appraisal.

Eta: if you have a 30%+( IIRC) service connected disability, there is no funding fee.

+1 and they usually want a VA home inspection prior to closing.  They are a good deal.  Thank you for your service.

VA home inspectors are very good they find everything.

Va loans are good but also check into other types of mortgages like FHA and rural developments. We went with the rural since it was the same as a va at the time and  you only get the VA once.

I don't think that's right.

The way I understand it is that you can use your VA guaranteed loan again if the person you are selling it to is using their VA option.

I have used my va home loan benefit 2 times.  The only thing that is required is that you sell the existing house before you buy the next one, although that requirement can be waived one time.  Basically you can only have one va loan going at a time.  The va website does make it sound like you can only use it once, it's very poorly worded.  Any realtor can explain it better than the va.

Common misperception but not true.  You can have a va loan eligible person take over your loan which waives the requirement to pay the first one off before getting another.

You can only get the VA on your PRIMARY-live in residence. IIRC....

The biggest plus is no money down. However if you have money to put down (20+%) there are better options out there. Especially if you are doing something short (less than 15 years). We have used it once for the first house we got but on the one we are in now got better rates elsewhere with the money we had to put down and the terms we wanted. Over all they are pretty decent. You have some extra paperwork to fill out tho and closing took about 2 weeks longer than it should.

VA loans are no secret.  Most mortgage lenders offer VA loans.

There are many upsides to using your VA benefit-

1)  It allows financing up to 100% (it's actually very slightly more than that) of the home value.  No down payment is required.  The home will require an appraisal.

2)  No PMI is required

3)  Interest Rate reduction refinancing is a breeze and very cheap.  (Though at historic lows with nowhere lower to go, I kind of doubt that rates are going to drop anymore any time soon)

But it's still a mortgage and you still have to qualify financially for the desired amount, just like anyone else would.

There are also some extra minor hassles that go along with any government benefit-

1)  The home must pass a VA inspection for minimum suitability.  Do not think that this is the same as a traditional home inspection.  It isn't.  AT ALL.  Get a real inspection.

2)  There are many forms that will be part of your mortgage application and closing paperwork.  ANY decent mortgage broker that offers VA loans  knows everything about them and will handle them for you but like everything you've ever done involving the .gov, all the paperwork has to be completed and the more things to get fucked up, the more they can get temporarily fucked up.

3)  There is a funding fee.  There are many variables that determine the fee but it's roughly 2% of the loan amount for the first time you utilize the benefit for a primary mortgage.  That fee is financeable.  If you have used a VA loan before, the subsequent funding fee is 3.3%.

4)  The terms are not always better than you could possibly get with a conventional mortgage but they are competitive with them.  Shop around.



Above all else, remember that it is still a mortgage.  Shop around.  Lenders rates and fees vary like with any other mortgage.  And, it should go without saying... Just because you qualify for X amount and can finance everything, it doesn't mean that you can actually afford it.

I've had great service and terms with National Bank of Kansas City.  Bernie Kalmus is awesome and this is his specialty.  I will gain nothing from recommending him.  I only know him because I have used him multiple times.

Give him a call.  NBoKC  Bernie Kalmus  

NBoKC will sell your mortgage immediately so you don't really know who will hold your loan after the first month but that's what 95% of mortgage lenders do.

At least NBoKC is used to VA loans across the country and 99% of the work can be done online, via email and fax.  Bernie will take care of you like you're a fellow veteran brother because you are.

I take extra step and follow more regulations when buying.

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+1

Used it twice now...all been said. USAA is great with them. I used a local place for the last one. Easy peasy to do. They push a little harder with background, credit, etc now, so be prepared to get documents together.



Done no down payment both times so far. If you're pulling disability at 10% or more, you don't have to pay the funding fee (like 1 or 2% of the loan...had to pay it with the first b/c VA hadn't cleared, but not on the second).



Only downside with 0 down payment is the obvious hole you start in.



There's a reason I have two of them right now...one turned into a rental when I moved for another job and couldn't sell for what the house is worth...especially with paying closing on the sell.



But use with confidence.

VA loans are great. They have a few additional steps and documentation. As others have said, you can get 100% financing with no PMI. VA loans do have a funding fee that they charge. It's financed into the loan. First time use is usually 2.15% of the loan amount. For example, if you borrow 100,000 your final loan amount would be 102,150. If you qualify for a VA loan, and don't have 20% down, there's no reason to look at any other loan type. There are some fees that are non-allowable, these fees have to be paid by the seller. They are very minimal, I've never had it be an issue on a VA deal. You can reuse your entitlement. It's not a one time deal. Your entitlement typically has to be restored through paying off the old loan. You can have two VA loans open at one time under certain circumstances.  As someone else mentioned, you can do a VA IRRL later on if rates drop with very little paperwork. VA rates are typically better than conventional rates. Currently you should be looking at right around 4.0% b

I passed on the VA loan recently because my credit union had a better deal going, saved a few grand versus the VA.  The CU paid all my closing costs and the rate was a little better on a 15 year. The catch with the no closing costs is if you sell or pay it off in the first three years you have to pay them the closing costs, prorated of course.

I did have to finance under 80% of appraised value to not have PMI with the conventional mortgage so had to put some cash down but the quicker I pay it down the better, plan on putting chunks here and there and having it paid off before 8 years anyway.

I know a bunch of people that have used it and are happy with it. A common example would be them buying a $150k house with zero money down and just tacking their fees onto the loan so they wind up with say a $154,000 mortgage or something for 30 years. It's the only way they would get in a house like that, wouldn't come even close to saving up a 30-40k down payment.

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