VA loans provide qualified borrowers with many mortgage options. By their zero-down nature, loan programs offer an affordable path to home ownership.
How much can I pay for a VA home loan?
we will discuss the following:
The advantage of a VA loan is that qualified Veterans like you can buy a home at a higher price than a non-VA home buyer using a conventional or FHA home loan because of the higher debt-to-income ratio and no monthly mortgage insurance, even with zero VA. / no down payment, 100% home loan.
VA loan income requirements
As a qualified Veteran thinking about buying a home using your VA loan benefits, you may be asking yourself, How much VA home loan can I borrow to buy a home? Get the answer now with the online home loan affordability calculator VA-Home-Loans.com. If you're not a Veteran or don't qualify for a VA loan, try this mortgage affordability calculator to calculate the mortgage you can afford before looking at a home for sale.
Homes are essentially illiquid assets, meaning you cannot quickly convert wealth in property into cash. Thus, people should not burden themselves with large mortgage payments that prevent them from depositing money in other vehicles. You should always have savings set aside in an emergency fund that can be accessed quickly. Guidelines vary, but a conservative approach requires an emergency fund totaling at least six months of your total monthly expenses. Regardless of what number you choose, paying your mortgage should not prevent you from maintaining this type of account.
In its original form, VA loans offered an affordable mortgage option for troops returning from World War II. However, in this capacity, the VA does not actually lend money. Instead, it guarantees a portion of every loan issued by a VA-approved lender (e.g. bank, credit union, mortgage company.
This government guarantee reduces the risk for these lenders. More precisely, if the borrower defaults, the VA will reimburse the lender a portion of the loan balance. Because of this reduced risk, lenders can offer the following exceptional terms for VA loans:
- No down payment needed
- No personal mortgage insurance (PMI) required
- Low interest rate
- Simplified refinancing options through Interest Rate Reduction Refinancing Loans (IRRRL)
VA Loan Funding Fees and Closing Fees
Borrowers should also consider the impact of loan size on VA funding costs and general loan closing costs. To offset the cost of the loan program, the VA charges funding fees ranging from 1.4% to 3.6% of the loan amount. Yes, you can include this fee in your total loan amount and pay it off over time. However, you should still be aware that, the larger the loan, the greater the cost of funding a VA loan.
In addition, the borrower must pay other loan closing costs, most of which cannot be included in the loan balance. While these fees will vary with the lender and location, the general rule is to ask for 3% of the loan amount to cover costs. And, borrowers have to pay mostly cash at closing. That is, no down payment does not mean no cash at closing. Borrowers need to plan for the possibility of paying thousands of dollars themselves in loan closing costs. In general, the smaller the mortgage, the smaller the out-of-pocket costs.