Understanding VA loans and VA-assumable properties can save you thousands of dollars and make homeownership more accessible. This guide breaks down everything you need to know about these valuable military benefits.
Understanding VA Loans
VA loans are one of the most valuable benefits available to service members, veterans, and eligible spouses. Here's what makes them special:
Key Benefits
- No down payment required
- No private mortgage insurance (PMI)
- Competitive interest rates
- Limited closing costs
- No prepayment penalties
Eligibility Requirements
- Minimum service requirements
- Certificate of Eligibility (COE)
- Satisfactory credit score
- Stable income history
- Reasonable debt-to-income ratio
VA-Assumable Properties: A Hidden Gem
One lesser-known aspect of VA loans is assumability. In a high-interest-rate environment, this feature becomes particularly valuable.
What is VA Loan Assumption?
VA loan assumption allows a buyer to take over the seller's existing VA loan with the same terms, including:
- Interest rate
- Remaining principal balance
- Repayment period
Example Savings:
Original VA Loan:
- Principal: $300,000
- Interest Rate: 3.5%
- Monthly Payment: $1,347
New Market Rates: 6.5%
- Same Principal: $300,000
- Monthly Payment: $1,896
Savings through assumption: $549/month
