Are you a military veteran looking for VA approved condos? As a veteran, you are eligible for quite a few financial incentives and benefits! One of these incentives is known as a VA mortgage. These mortgages have more relaxed restrictions than conventional loans. These loans help former servicemen and servicewomen afford a home once they complete their military service.
While most homes qualify for this sort of loan, some condos, unfortunately, do not. If you are on the market for a condo, you have got to select one among the VA approved condos to use this type as financing.
How does a VA Loan for VA Approved Condos Work?
A VA loan works similarly to a standard 30-year mortgage, except that it has relaxed requirements. With a standard mortgage, you would need 3-20% as a deposit. If you don’t have the complete 20% down, you will need to pay something called “Private Mortgage Insurance” or PMI. This insurance protects the bank from losses just in case of default. Your credit score must be sufficiently high also.
VA loans loosen these requirements a bit – for a VA mortgage on VA approved condos you will typically need a credit score of 650 or better. Many lenders will make the loan on a VA approved condo with a lower score (such as 620). However, with a score of 650 or more, you are far more likely to be approved.
Loans through this program happen to require no deposit and as a veteran you can buy your dream VA approved condo with $0 down. There is an upside to putting a minimum of 5-10% down: VA loans have a funding fee. At 0% down, that fee is usually 2.15% of the entire price. On a $200,000 condo that might be $4,300. With 5% down payment on the condo that rate typically goes right down to 1.5%.
On an equivalent $200,000 condo, the funding fee would be $3,000. By having the ability to put $10,000 down, you’ll save $1,300 on the entire loan amount. If you have got the funds that are sensible to place to use your money!
No matter what proportion you are planning to put down there is no PMI on a VA loan. If you set the bare minimum of three percent down with a standard mortgage, the PMI costs about 1% of the entire loan value per annum. On a $200,000 condo, that might be about $150 per month just for insurance.
In addition to not having PMI, VA loans typically charge 0.25% less per annum in interest. While the typical rate for a standard mortgage could be at 4.5%, a VA loan would often be at 4.25%.
To summarize, on a $200,000 condo with 0% down your monthly payment on a VA mortgage would be $983 per month. For the same condo given a standard mortgage with a deposit of three percent it would be a minimum of $1,100. All in all a VA loan not only saves you from needing $6,000 down, but it also lowers your monthly payment!
A VA Loan Sounds Awesome, but is my Condo Eligible?
While VA loans have incredibly favorable terms for veterans, there is one substantial caveat. You ought to select a unit from among the VA approved condos. If your required condo is not on the approved list, then you cannot get a loan to buy it.
To find condos that are approved, use the Department of Veterans Affairs website: https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch. The website seems like it belongs in the 1990s as opposed to 2020, but it works like a charm!
If you’re using a real estate agent, allow them to know that you simply are eligible for a VA loan so they can pull some listings from MLS that are VA loan eligible. That way once you check out properties together with your agent you simply focus on the ones that you will get a loan for. Employing a real estate agent is by far the quickest and easiest method to explore VA approved condos.
It’s worth noting that the whole complex is either approved or denied for VA funds. The Department of Veterans Affairs doesn’t check out each condo unit. If the condo project is approved, you’ll buy any condo unit within that complex.
If you’re a veteran and are watching buying a replacement residence, let your realtor know. Have them review all VA approved condos with you so you get into your new place with fantastic mortgage terms!