If you’re an honorably discharged veteran of the U.S. Armed Forces or you’re currently serving, you could be eligible for a VA loan. But what is a VA loan, and how do you use it to buy a home in Catonsville?

Here’s what you need to know.

 

What is a VA Loan?

A VA loan is a mortgage funded by a private lender and backed by the Veterans Administration. Millions of service members and veterans have used these loans to buy a primary home or to refinance an existing mortgage.

 

How Do VA Loans Work?

VA loans are a little different from conventional mortgages. The Veterans Administration doesn’t fund them, but the U.S. government does back them. Because of that government backing, lenders can offer borrowers $0 down options – and often, favorable rates and terms.

 

Who’s Eligible for a VA Loan?

Not everyone is eligible for a VA loan. You must be an active-duty service member, a reservist or Guardsman, a qualifying veteran or a qualifying dependent to use this type of loan. Check out this eligibility chart:

When You Served Minimum Time Served in the U.S. Armed Forces
Between September 16, 1940, and July 25, 1947 (WWII)
  • 90 total days, or
  • Less than 90 days if you were discharged for a service-connected disability
Between July 26, 1947, and June 26, 1950 (post-WWII period)
  • 181 continuous days, or
  • Less than 181 days if you were discharged for a service-connected disability
Between June 27, 1950, and January 31, 1955 (Korean War)
  • 90 total days, or
  • Less than 90 days if you were discharged for a service-connected disability
Between February 1, 1955, and August 4, 1964 (post-Korean War period)
  • 181 continuous days, or
  • Less than 181 days if you were discharged for a service-connected disability
Between August 5, 1964, and May 7, 1975 (Vietnam War), or
February 28, 1961, to May 7, 1975, if you served in the Republic of Vietnam
  • 90 total days, or
  • Less than 90 days if you were discharged for a service-connected disability
Between May 8, 1975, and September 7, 1980 (post-Vietnam War period), or
Between May 8, 1975, and October 16, 1981, if you served as an officer
  • 181 continuous days, or
  • Less than 181 days if you were discharged for a service-connected disability
Between September 8, 1980, and August 1, 1990, or
Between October 17, 1981, and August 1, 1990, if you served as an officer
  • 24 continuous months, or
  • The full period (at least 181 days) for which you were called to active duty
Between August 2, 1990, and the present (Gulf War)
  • 24 continuous months, or
  • The full period (at least 90 days) for which you were called or ordered to active duty, or
  • At least 90 days if you were discharged for a hardship, a reduction in force, or for convenience of the government, or
  • Less than 90 days if you were discharged for a service-connected disability
You separated from service after September 7, 1980, or
After October 16, 1981, if you served as an officer
  • 24 continuous months, or
  • The full period (at least 181 days) for which you were called or ordered to active duty, or
  • At least 181 days if you were discharged for a hardship, a reduction in force, or for convenience of the government, or
  • Less than 181 days if you were discharged for a service-connected disability
You are currently on active duty in any branch
  • 90 continuous days
You are or were in the National Guard or a reserve component, or continue to serve in the Selective Reserve

You must have been:

  • Discharged honorably, or
  • Placed on the retired list, or
  • Transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable
You served in the National Guard or a reserve component between August 2, 1990 and the present
  • 90 continuous days

 

It’s a good idea to talk to your lender about getting a VA loan if you qualify. Your lender can walk you through the process – including getting your Certificate of Eligibility – and help you apply.

 

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VA Loan FAQ

Check out these common questions about VA loans:

  • Can you use a VA loan more than once?
  • What kinds of homes can you buy with a VA loan?
  • Can you buy an investment property with a VA loan?
  • What kind of credit score do you need to get a VA loan?
  • Do you have to pay for private mortgage insurance with a VA loan?
  • What is a VA Funding Fee?
  • Can you pay off your VA loan early?

Here’s a closer look at each.

 

VA Loans - Can You Reuse a VA Loan to Buy a Home in Catonsville

 

Can you use a VA loan more than once?

 

You can use more than one VA loan, but you have to pay one off before opening a new one. Your benefit never expires – but you can’t keep more than one VA loan open at one time.

 

VA Loans - What Kinds of Homes Can You Buy

 

What kinds of homes can you buy with a VA loan?

 

VA loans are really designed for “move-in ready” or “turn-key” homes. If you want to buy a fixer-upper or another type of property, a different type of loan may be right for you. You can’t use your VA loan to fund repairs on a home you just bought. (You can, however, use a VA loan to refinance your current loan and make repairs to the home you live in now.)

 

VA Loan - Can You Buy an Investment Property With a VA Loan

 

Can you buy an investment property with a VA loan?

 

You can’t buy an investment property with a VA loan – they’re only available for primary residences. That means you can’t buy a home that you plan to rent out within the first three years from taking out the loan. However, in some cases, you can use a VA loan to buy a duplex or another, similar property – but you’ll have to check with your lender first.

 

VA Loan - What Credit Score Do You need to Get a VA Loan

 

What kind of credit score do you need to get a VA loan?

 

There is no minimum credit score for a VA loan. However, your lender likely has a “low end” threshold. The good part about that, though, is that the VA doesn’t allow lenders to use only your credit score to determine whether you qualify for this type of loan. Instead, lenders have to look at your entire financial picture in determining whether you qualify.

 

VA Loan - Do You Have to Pay for Private Mortgage Insurance With a VA Loan

 

Do you have to pay for private mortgage insurance with a VA loan?

 

You do not have to pay for private mortgage insurance, or PMI, when you have a VA loan – even if you put nothing down. The VA doesn’t allow lenders to charge you PMI, and they’re backing the loan; that means if you default on your payments, the VA will guarantee at least part of your loan. That’s also what allows lenders to offer you more favorable terms.

 

VA Loan - What is a VA Funding Fee

 

What is a VA Funding Fee?

 

Every VA loan comes with a VA funding fee, which you can roll into the cost of your loan. For some people, the VA funding fee can be waived entirely (such as for people who have service-connected disabilities).

 

VA Loan - Can You Pay Off a VA Loan Early

 

Can you pay off your VA loan early?

 

There’s no prepayment penalty for people who use a VA loan. That means no matter how much money you finance, you can pay it off as early as you’d like with no penalty. (Sometimes, with conventional loans, lenders charge a penalty for prepayment because they’re not getting the earnings from interest that they anticipated – but the VA prohibits prepayment penalties.)

 

VA Loan - What if You Have a Foreclosure

 

What if you have a foreclosure?

 

You can still use a VA loan if you have a foreclosure or bankruptcy in your past. Lenders can’t just look at your credit – they have to look at your entire financial picture when determining whether to lend you money. And because the VA guarantees these loans, lenders can let you borrow with more confidence than they could if you didn’t have government backing.

 

Are You Buying a Home for Sale in Catonsville?

If you’re thinking about buying a home for sale in Catonsville, we can help – and we’re always pleased to work with veterans and service members. Please call us today at 443-955-1227 to find out how! If it’s easier, fill out the form below and we’ll get back to you right away.

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