Summary: The Dallas-Fort Worth metro area has a sizeable military population. As a result, there are many home buyers in the area who could benefit from using a VA-guaranteed home loan. The VA loan program offers many benefits for Dallas-area home buyers. Today, we’ll examine 5 VA Loan Benefits .
Most military members and veterans in the Dallas area are eligible for the VA loan program. It’s open to just about anyone who has served in the military, under honorable conditions. And there’s a lot to like about this program.
Congress created the Department of Veterans Affairs (VA) home loan program in the 1940s, to reward servicemembers in the wake of World War II. It has been going strong ever since. Today, VA loans give home buyers the ability to purchase a property with no money down. But that’s just one of the benefits.
Benefit #1: You could buy a home with no down payment.
If you use a VA loan to buy a home in the Dallas area, you could potentially finance 100% of the purchase price. In other words, you could buy a house with zero money down. This is arguably the biggest benefit to using the VA loan program.
Numerous surveys over the years have shown that the down payment is the biggest obstacle to homeownership. But in many cases, it’s only a perceived obstacle. In 2018, a joint report from the Urban Institute and Freddie Mac stated:
“Yet most potential homebuyers are largely unaware that there are low down payment and no down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.”
For decades, the VA loan program has enabled military members and veterans to buy a house with no money down. So much for that obstacle.
Benefit #2: You could avoid paying mortgage insurance.
Home buyers in the Dallas area who put down less than 20% on a home purchase usually have to pay for mortgage insurance. These specialized insurance policies are often required when the loan-to-value (LTV) ratio rises above 80%.
This is another major benefit of using a VA loan. Borrowers who use this program can typically avoid paying mortgage insurance — even when they put no money down. As it states on the Department of Veterans Affairs website: “With a VA loan, you also avoid steep mortgage insurance fees.” All of this translates into a more manageable monthly loan payment.
Benefit #3: Seller concessions and closing cost contributions are allowed.
The VA loan program also allows sellers to contribute money toward the home buyer’s closing costs and other fees. This gives you, the buyer, more flexibility when it comes to negotiations. It could also save you thousands of dollars in out-of-pocket costs.
Within the context of VA loans, a “seller concession” occurs when the person selling the property helps cover a cost that the buyer would normally pay. For example, the seller might agree to pay the buyer’s VA loan funding fee, mortgage discount points, or other costs.
In addition to these concessions, the home buyer can also ask the seller to pay some or all of their closing costs.
Granted, these things are “market dependent.” In a slower real estate market, sellers are generally more willing to contribute to the buyer’s costs. While in a hot market, they might decline such a request. (Seek your real estate agent’s advice on this subject.)
Benefit #4: VA loans offer competitive interest rates.
DFW home buyers who use VA loans to buy a house can also benefit from competitive mortgage rates. According to a study conducted by Polygon Research, borrowers who use the VA program tend to have the lowest interest rates and origination fees of all the different mortgage types. To measure this, the research firm analyzed data collected under the Home Mortgage Disclosure Act (HMDA).
To quote their November 2020 report:
“From HMDAVision® [an analysis tool] we see that VA loans in fact on average had the lowest interest rates in 2019 — both for all VA loans, and for the home purchase subset.”
It’s also worth noting that mortgage rates are currently hovering at historically low levels, regardless of mortgage type. On December 17, Freddie Mac reported that the average rate for a 30-year fixed home loan had fallen to 2.67%. That was the lowest average in more than 50 years, to date.
Mortgage loan interest rates can vary from one borrower to the next, for a number of reasons. But it’s good to know that our deserving military members and veterans often qualify for some of the lowest rates available.
Benefit #5: You don’t need perfect credit to qualify.
VA mortgage loans are partially guaranteed by the federal government. That’s what makes this program unique, when compared to conventional or “regular” home loans. As a result of this government backing, the program offers flexible qualification criteria for borrowers.
In conclusion, you don’t need perfect credit to qualify for a VA loan in the Dallas area. The most important thing is that you have steady and stable income, enough to cover your monthly payments and other recurring debts. Share these 5 VA Loan Benefits for DFW Area Home Buyers to your fellow veterans!