VA Loan Calculator: What Is a VA Loan?

We want all of our clients to be able to afford the home of their dreams and have made this VA Loan Calculator available to help you determine how much you can afford. As the cost of living increases, this can become much harder for families to get out of renting and get into that first home. A VA loan is a special mortgage loan given only to Servicemembers, Veterans and eligible surviving spouses to enable them to buy a home.

A VA mortgage loan is a Veterans Affairs loan that is made available through the United States Department of Veterans Affairs. A VA loan is provided only through private lenders such as banks, mortgage companies and lending institutions like Lending Studios. Those funds are given to eligible homebuyers and the terms are dictated by Veterans Affairs, not the institution lending to the buyer. The VA sets the qualifying standards, guarantees the portions of the loan, and dictates the terms of the mortgage that buyers must follow.

VA Loans 101

VA loan funds can be used to buy, repair, retain, build or adapt a home, and the funds must be used for a personal residence. The home loans that come through the United States government are secured through the Government National Mortgage Association (GNMA). You may know this by the term “Ginnie Mae”.

There are various types of VA loans available to veterans and their families, including VA home purchase loans, interest rate reduction refinance loans, cash-out refinance loans, the Native American Direct Loan Program, and adapted housing grants. Buyers can borrow against home equity to pay off debt with a cash-out refinance loan. They can also use that equity to pay for school or home improvements.

The IRRRL allows a borrower to refinance an existing VA loan at a lower interest rate or a converted interest rate. The Native American Direct Loan Program allows the purchase, improvement or construction of a home on federal trust land. Disabled veterans can apply for an adapted housing grant to purchase a home, build an adapted home or modify their current home according to the disability. And, of course, buyers can purchase a home with the VA home purchase loan.

How Do You Benefit?

You can use a VA loan for buying or building a primary residence, or for a cash-out refinancing of a current VA loan. If you’re eligible, there are many benefits, including:

  • No down payment needed when the purchase price is less than the appraised price.
  • Strict limits on closing costs, so there won’t be any surprises.
  • Smaller interest rates than conventional loans.
  • No minimum credit score is required for a home purchase.
  • No monetary penalty (prepayment penalty) for paying off the mortgage ahead of time.
  • Private Mortgage Insurance (PMI) is not needed because the funds are backed by the government. This can save $100-200 a month compared to conventional mortgage loans.
  • No limit on the size of the loan. However, there may be a cap if you’re wanting to buy with no money down. This is because there’s no limit to the amount you can borrow from the VA, but there is a limit to the amount of liability the VA will take on your loan.
  • There is no minimum credit score applicants must have. However, the specific lending institution may require specific limits in order to be a client at that institution.
  • VA loans often have more favorable terms than conventional loans because the VA only partially guarantees mortgages and refinancings that are made through private lending institutes, banks and credit unions. The lending institution gives more favorable terms to secure the loan even more.
  • You don’t have to be a first-time homebuyer.
  • You can still qualify for a VA loan after bankruptcy or foreclosure, but you will have to wait 2 years for that qualification.
  • The VA can assist buyers that are facing foreclosure. VA administrators can negotiate with lenders when borrowers don’t keep up on payments.

VA Loan Calculator: Do You Qualify?

No matter the type of VA loan, all buyers must obtain a Certificate of Eligibility to qualify for an FHA loan. This is usually an automated eligibility service that can tell you if you’re approved or not. You must be a veteran that was not discharged “dishonorably”, and you must have met specific service requirements to be a veteran. Buyers must also be either veterans, those on active duty, or National Guard/Reserve members. If you are a National Guard or Reserve member, you must have served more than six years.

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