Military personnel, military families, and veterans are entitled to a number of benefits, but this doesn’t mean they aren’t going to face struggles throughout their lives. As much as we might want to provide an easy road for those who made the sacrifice to serve, this isn’t always possible. The good news is there are resources out there for vets who have financial challenges. These programs can completely alleviate the burden of financial struggles, but it can make it a little easier.
Loans for Home Financing
One of the best ways for a vet to transition from military to civilian life is to establish themselves in a home of their own. This is a proud moment for anyone, but it can be especially rewarding for a vet who has spent time traveling from base to base and not really feeling as if they are settled anywhere.
Veterans have a variety of financing options for buying a home and each has its benefits. These military loans have been available since the 1940s and have helped millions of vets get a home of their own. VA home loans are available for both vets and active duty service members, as long as they meet basic requirements.
These military loans not only offer great terms, they also have fewer requirements for vets to qualify. In some cases, vets only need to show proof of their service, as opposed to the background checks that involve proof of income, credit history, and financial assets that many mortgage loan applicants would face.
What are some of the best military loan options for those who want to buy a home?
The majority of people who are currently serving or who are veterans qualify for Veterans Affairs mortgages or VA loans. It might also be possible for members of the National Guard and reservists to receive a VA loan, as well as spouses of those who died while on active duty.
These loans require no down payments and have few other requirements. For instance, the credit history requirements are far less stringent than they are with a conventional loan.
There is sometimes confusion about how these military loans work. The Veterans Administration is not actually lending money. What happens is a regular mortgage lending institution lends the money, but the VA agrees to guarantee the loan, thereby reducing the risk for the mortgage lender.
Fees associated with the loan can be rolled into the loan or paid out of pocket and is usually no more than 3.3% of the total loan amount. Sellers can pay the closing costs associated with the sale of the home, but they are not required to do so, which means a buyer might need a down payment for a VA loan—but not always.
VA loans can provide 100% financing and it’s not necessary an applicant be a first-time buyer to qualify. It’s also possible to use a VA loan more than once if you relocate to a new home later in life.
The primary downside to a VA loan is the restrictions it places on how much you can spend on a home. This isn’t a problem for many borrowers, but some will find that loan limits restrict them and might want to consider another type of loan.
USDA military loans provide funds to vets who are interested in purchasing a home and/or land in a rural location. Applicants must show the property they’re considering is located in a pre-defined zone of eligibility. These loans are predicated more on the property than they are on the qualifications of the person who is applying. If you’re considering a home in a more rural area, this can be a great option for you.
Federal Housing Administration loans (FHA loans) are available to military and non-military applicants, as long as the home in question is a “fixer-upper.” These loans are a great option for people who are willing to put a little effort and “elbow grease” into a home that is not move-in ready. Of course, many fixer-uppers can be moved into immediately, but they might be older or need some cosmetic work or other updates.
This can be a great opportunity for vets who not only want to own a home but would also like to focus their time and energy on a rewarding project. FHA loans might be the only option for borrowers with high debt-to-income ratios and low credit scores, which can help you get into a home even if you thought you weren’t eligible.
It is possible for a vet to use a conventional mortgage loan. These standard loans require a down payment and evaluate a borrower’s credit history. These loans offer no government backing and are based on the individual’s qualifications, so those applying for this type of loan will need to show they can afford the down payment and their monthly mortgage payments. The benefit of this program is there are absolutely no restrictions in terms of the type of home or location of a home you buy. Conventional loans can also be less frustrating and take less time to process—though this isn’t always the case.
Other Types of Military Loans
In addition to loans to help military members and veterans to buy homes, there are also loans available to help pay for schooling and for opening a business.
Education military loans help with loan repayments for tuition and make it easier for vets to get the training and education they need, supplemental to their military experience, they need to get a job.
Business loans are designed to provide money to vets who want to start their own business or to expand an existing business. Those who have been in the military are often eager to take the initiative to start a business. They are innovative and want to give back to their communities and launching a business is a great way to put their skills to use and make the most of the opportunities they’ve earned through their military service.