How to buy a home using a VA loan

California attracts million of potential homeowners for dozens of reasons. With an abundance of big cities close to military bases, it’s easy for military homeowners to overlook Sacramento. At the same time, buying a home in California gives active-duty service members and veterans the chance to use their VA Home Loan benefits.

After World War II, Congress enacted the VA loan program which has helped more than 18 million service members become homeowners. The program is available to qualified veterans and service members, and includes several financial benefits to borrowers.

Arguably the most touted advantage of the program is paying no money down. Qualified borrowers can finance their home without paying a penny down. In Sacramento County in California, borrowers can finance a home worth up to $418,750. The standard limit is $417,000, but more expensive markets have higher limits.

Borrowers don’t just save in the absence of paying money down. With a VA loan, sellers pay up to 6 percent of closing and concession costs. Also, the miniscule VA funding fee can be packaged into monthly payments so borrowers need not pay it up front.

Monthly payments for VA loans are markedly lower than those of conventional mortgages. VA loan borrowers do not pay private mortgage insurance, which can be a hefty cost every month in traditional mortgages. Additionally, interest rates for VA loans do not soar because of the VA’s guaranty. The VA does not issue VA loans, but it insures up to one-quarter of each loan’s value. As a result, lenders assume less risk and feel comfortable offering lower interest rates.
Homebuyers must be current or former members of the military to meet the VA home loan requirements, but homebuyers don’t have to have perfect credit. Lenders who issue VA loans don’t expect perfect credit, but look for scores of about 620. VA loan applicants with a history of bankruptcy or foreclosure are not immediately disqualified.
To qualify for a VA loan, borrowers usually fall into one of the following categories:

-While on active duty, served 90 days during war time or 181 days during peace time.

-For at least six years, served in the Reserves or National Guard. -Still on active duty and meets one of the criteria above.
-Spouse of a service member who died in the line of duty or as a result of a service-related injury and has yet to remarry.
The first step in a getting a VA loan is completing a Certificate of Eligibility (COE) from the VA or a VA-approved lender. A COE affirms that you meet the initial requirements for the VA home loan program. For more information on VA loans, contact a VA-certified lender.