What is the VA Fully Amortizing Fixed Loan?
The VA Fully Amortizing Fixed Loan program can help the nation’s men and women in uniform, as well as qualifying veterans, achieve the American Dream by offering affordable home financing with zero down payment required.
The Veterans Administration generally requires an annual fee of $100 per third party originator for each entity that sponsors their origination. AFR pays this fee on behalf of its brokers and correspondents on AFR-related VA loans!
VA Fully Amortizing Fixed Loan Basics
- Purchase and refinance options
- No down payment requirements
- 15-, 20- and 30-year term options
- Fixed monthly payments
- One- or two-unit homes
- Single family home, VA approved condos, manufactured homes, PUDs
- Primary residence only
What are the benefits?
VA Loans are appealing to many eligible veterans because they offer up to 100 percent financing and low interest rates. There are also many other benefits to help past and present military personnel purchase or refinance a home.
Fully amortizing fixed loans means the borrower’s interest rate never varies as long as the loan is repaid as agreed. Many borrowers prefer a fixed mortgage because it provides a sense of consistency and security, in contrast to other loans with introductory interest rates that have the potential to increase later in the term of the loan.
Don’t Need Perfect Credit
VA Loans are often easier to qualify for when compared to other mortgage programs. Even those who have had some credit issues in the past may be eligible for VA financing with a low interest rate.
No Mortgage Insurance Premiums
Because a VA Loan is guaranteed by the Department of Veterans Affairs, borrowers aren’t required to pay monthly PMI, which helps keep mortgage payments low. There is a one-time VA funding fee required at closing, which can generally be financed into the loan.
Who is eligible for a VA Mortgage?
The borrower must be a qualifying active duty member of the U.S. military, veteran, reservist or National Guard member, or eligible surviving spouse.
Borrowers will also need to meet the income and asset requirements of VA loans. They must also obtain a certificate of eligibility (COE) from the Department of Veterans Affairs.
The spouse of a Veteran can also apply for home loan eligibility under one of the following conditions:
- Un-remarried spouse of a veteran who died while in service or from a service-connected disability, OR
- Spouse of a service member missing in action or a prisoner of war
- Surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003 (Note: a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must have applied no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 6, 2003, that are received after December 15, 2004).
- Surviving spouses of certain totally disabled veterans, whose disability may not have been the cause of death
Borrowers may also apply for eligibility if they fall into one of the following categories:
- Certain U.S. citizens who served in the armed forces of a government allied with the United States in World War II.
- Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard, Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with World War II service, and others.
In which scenarios is the VA Loan Useful?
This program can be ideal for veterans or military personnel who are struggling to find affordable, stable home financing options. The VA Amortizing Fixed Loan is attractive because it doesn’t require a down payment or private mortgage insurance, and it offers competitive rates. With the fixed rate of an amortization loan, borrowers might more successfully manage their household budgets. All of these scenarios open up opportunities to service members and their families for homeownership.
Buying a Home with a VA Mortgage
As with any fully amortizing fixed rate loan, this VA loan product offers borrowers stable monthly payments that won’t change due to mortgage rates. The rate remains fixed for the entire length of the loan; however, the monthly payments are applied to principal and interest differently as the loan progresses.
VA Fully Amortizing Fixed Loan Refinancing
Not only is the VA Loan a great option for home buying or building, it can also be used for refinancing. Eligible homeowners who have an existing mortgage may be able to lower their monthly payment, move from an adjustable rate mortgage to a fixed rate, or shorten or increase their loan term by refinancing into a VA mortgage.
Other Programs to Consider
If the VA Fully Amortizing Fixed is not an ideal fit for a particular scenario here are a few other products to explore:
- For the purchase of HUD homes requiring minimal repairs: FHA 203(b) Repair Escrow Loan
- Streamlined, simplified VA refinance option: VA Interest Rate Reduction Refinance Loan (IRRRL)
- To finance new home construction projects: VA One-Time Close Construction-to-Permanent Loan