Those new to the homebuying market here in California may wonder why you occasionally hear…
Of all the steps it takes to buy a home, locking down the best possible loan is one of the biggest and most important. Lucky for anyone looking to buy a home here in California, at New Way Mortgage, we’re experts at this process. So if you’re reading this, you’re already off to a good start. And if you happen to be a member of the military community, you’ve got another thing going for you when it comes to home loans because chances are, you’re eligible for a VA loan.
Sure, there are lots of perks to being a veteran—the GI Bill, free appetizers at chain restaurants every November 11th, those baseball caps covered in pins—but it’s hard to beat one that can help you buy your dream home. For those who served our country, there’s no better option for home loan financing than one backed by the U.S. Department of Veterans Affairs. So if you and/or your spouse served, allow us to explain what one of these loans is and the specifics of the reasons you should get a California VA loan and who, exactly, is eligible.
What is a VA Loan?
As mentioned above, a VA home loan is backed by the very same federal government you worked for when you were in uniform. Or still work for, if you’re active or in the reserves. The VA guarantees a portion of the loan you take out via a private lender. With the full financial might of the US government covering a portion of your loan, lenders know that the risk of major financial losses due to foreclosure is mitigated. As such, these loans have several benefits over normal home loans.
Specific Reasons You Should Get a California VA Loan
- Interest rates are typically better than those of a conventional loan.
- No down payment required so long as the sale price isn’t higher than the home’s appraised value.
- No need for mortgage insurance, even with a low or no down payment.
- Lower closing costs than with a conventional loan because the VA doesn’t allow lenders to charge certain fees that often come with conventional loans.
- No penalty fee for paying the loan off early.
- VA loans are transferable under certain circumstances.
While these benefits apply across the board, there are a few different types of VA loans. Aside from the standard type, some versions apply to certain specific situations and groups of vets. You should know about all of them if you’re considering your eligibility for a California VA loan. It might sound like things are about to get complicated, but don’t worry. Knowing what kind of loan you’re eligible for is pretty straightforward.
Types of VA Home Loans
- Purchase Loan: The standard VA loan that most veterans are eligible for with all the aforementioned benefits.
- Native American Direct Loan: An NADL is a loan available through a special program for Native American veterans and their spouses.
- Interest Rate Reduction Refinance Loan: Those with an existing VA loan wishing to lower or stabilize their monthly payments may be eligible for a VA-backed IRRRL.
- Cash-Out Refinance Loan: A way to swap your current VA loan for a different one if you want to take cash out of your home equity.
Obtaining VA Loans in California
Now that you know the broad strokes of VA loans, let’s dig into the details of getting one here in California. The process is fairly simple, so let’s dive in.
VA Loan Process Step-by-Step
- Apply for a certificate of eligibility (COE). This can be done online via the VA’s eBenefits site or by snail mail with a 26-1880 form (and we can help, if needed).
- Come to us with your COE, and we’ll get things started.
- We request a VA appraisal of the home you’re buying. This is not a home inspection but is an independent review of the home to assess its value to make sure it matches the loan amount.
- We review your paperwork, credit, income information, etc. and conduct our due diligence to approve your loan.
It’s as simple as that. As you can see, once you get your COE, most of the work takes place on our end. So you can just sit back and let us do our thing. It’s work we’re happy to do if it gets you into the home you’re looking for. After all, you served your country, so this is a rewarding way we get to serve you.
Who is Eligible for a California VA Loan?
If all this sounds so good to be true that it must be hard to qualify for eligibility, don’t fret. The vast majority of veterans are eligible. And the requirements are the same in every state, ours included. So if you know you’re eligible for a VA loan somewhere else—or already received and paid one off elsewhere in America—then you are here, as well.
VA Loan Eligibility Criteria
- A minimum of 90 days of active-duty service, not including entry-level training. It doesn’t matter if you served in war, peace, overseas, or solely within the U.S. If you served those 90 days, you are eligible. This requirement is waived for service members who received medical discharges due to a service-related injury before completing 90 days of active duty.
- Six years in the Reserves or National Guard.
- Your discharge status must be Honorable, General Under Honorable Conditions, or due to hardship or medical reasons. Those with an Other Than Honorable (OTH), Bad Conduct (BCD), or Dishonorable Discharge are not eligible.
- Some surviving spouses are also eligible for a VA loan.
- You must have VA loan eligibility left. In most cases, if you took out a VA loan to previously purchase a house, you’ll need to pay it off before applying for a new loan (but not always).
Getting Your California VA Loan
Given all these reasons you should get a California VA loan, there’s really no downside to picking one over a standard home loan. So let us help you make the most of this well-deserved benefit you earned through your service and courage. Because a “thank you for your service” is always nice to hear, but a new home is even better. And with New Way Mortgage’s help, it can be a smooth and easy process.