I heard that if I get a VA loan, I don't need to pay the down payment at all when purchasing the house but to

Asked by Jeffery Haas, Colorado Springs, CO Sun Apr 12, 2009

pay extra 60$ on every month housing payment. Is it true or only applicable to certain people?
And if I don't necessarily pay the down payment, would it affect the interest rate being higher than paying the down payment?

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10
Robert McGui…, Agent, Denver, CO
Sat Dec 15, 2012
Jeffery,

One of the benefits of a VA loan is that there is no downpayment required. It is a benefit to veterans and it does not make your interest rate higher. There are many great reasons to go with a VA loan. I have done a couple of VA loans personally and have helped other veterans purchase homes using the VA loan program. You need to find a lender who is familiar with and experienced with doing these loans. It will also be good to have Realtor who understands the requirements of purchasing VA so he can write the offer correctly and know what homes will qualify for a VA loan. I am in Denver but here are several brokers who specialize in working with veterans in the Colorado Springs area. Best of success and thank you for your service to our country.

Robert McGuire ASR
Realtor/Consultant
Your Castle Real Estate
Direct - 303-669-1246
http://about.me/robertmcguire33
0 votes
Denny And Joy, Home Buyer, Colorado Springs, CO
Sun Nov 4, 2012
Your interest rate is set by the bank loaning you the money and they follow guidelines of the VA. But if you can afford any kind of down payment, it will make your payment smaller and that must mean you would have more disposable monthly income. Why stress your budget with a no down payment scenario if you don't have to.
0 votes
Amy P Secundy, Agent, Colorado Springs, CO
Sat Aug 15, 2009
The veteran can pay a maximum of all reasonable and customary amounts for any and all of the "Itemized Fees and Charges" designated by VA as defined below plus a 1% flat charge by the lender plus reasonable discount points. Some special provisions apply to construction, alteration, improvement and repair loans.

HOW TO HAVE MINIMAL TO NO CLOSING COSTS
Please note that often times veterans believe that closing costs are covered by a VA mortgage. While that is not technically true, the same effect can be reached through careful structuring of your real estate contract. The loan amount will be the purchase price or appraised value, whichever is less (plus the VA Funding Fee). So if you want your closing costs covered by the loan, you need to increase the price and have a stipulation with the seller will pay the closings costs and pre-paid expenses equal to the amount by which you have increased the price. As long as the home appraises for the increased price, you will have the closing costs paid as part of the deal. Closing costs and pre-paid expenses can vary widely with 3% - 5% as the range for most places. If you want a more specific number in this regard after you have started looking for properties, we can provide you with a Good Faith Estimate for a particular property that you have an interest.

ITEMIZED FEES AND CHARGES
The VA defines allowable fees and charges that the veteran borrower can pay or closing costs that may be charged to the borrower. These costs are determined as reasonable and customary by each local VA office. All other costs in the transaction are considered non-allowable and generally paid by the seller when purchasing a new home or by the lender when refinancing your current VA mortgage. Itemized fees and charges are as follows:

APPRAISAL AND COMPLIANCE INSPECTIONS
The veteran can pay the fee of a VA Appraiser and VA compliance inspectors. The veteran can also pay for a second appraisal if they are requesting a reconsideration of value. The veteran cannot pay for a second appraisal if the lender or seller is requesting a reconsideration of value or if parties other than the veteran or lender request the appraisal.

RECORDING FEES
The veteran can pay for recording fees and recording taxes or other charges incident to recordation.

CREDIT REPORT
The veteran can pay for the credit report obtained by the lender.

PREPAID ITEMS
The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.

HAZARD INSURANCE
The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.

FLOOD ZONE DETERMINATION
The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.

SURVEY
The veteran can pay a charge for a survey, if required by the lender.

TITLE EXAMINATION AND TITLE INSURANCE
The veteran may pay a fee for title examination and title insurance, if any. If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.

SPECIAL MAILING FEES FOR REFINANCING LOANS
For refinancing loans only, the veteran can pay charges for Express Mail or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling.

VA FUNDING FEE
Unless exempt from the fee (10% minimum disability from the VA), each veteran must pay a funding fee to VA.

OTHER FEES AUTHORIZED BY THE VA
Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may request VA to approve such a fee if it is, (a) normally paid by the borrower in a particular jurisdiction, and (b)considered reasonable and customary in the jurisdiction.
The following list provides examples of items that CANNOT be charged to the veteran as "itemized fees and charges." Instead, the lender must cover any cost of these items out of its flat 1% fee.

Loan closing or settlement fees, document preparation fees, preparing loan papers or conveyance fees, attorneys services other than for title work, photographs, interest rate lock - in fees, postage and other mailing charges, stationery, telephone calls and other overhead, amortization schedules, pass books, and membership or entrance fees, escrow fees or charges, notary fees, preparation and assignment of mortgage to other secondary market purchasers, trustee's fees or charges, loan application or processing fees, fees for preparation of truth-in-lending disclosure statement, fees charges by loan brokers, finders or other third parties, and tax service fees.
0 votes
Gilda Baxter…, , Colorado Springs, CO
Tue Aug 11, 2009
Hello Jeffery;

I have 2 son in laws in the Army and understand your concern. You'll want to make sure your lender knows how to do VA loans. Some lenders know VA loans better than others. From what I understand the funding fee can range anywhere from .5 to 3.3%. They generally put the funding fee into the loan. The more times you use VA financing, the fee to finance is higher. This is a great benefit to our VA. Sometimes the money is tight and this helps our service men and women to get into their home.
Web Reference:  http://www.GildaBaxter.com
0 votes
Littletongurl, , Littleton, CO
Wed Jul 22, 2009
We just closed on a home, and used my husband's VA loan. No downpayment required and it does not affect your interest rate.
Be sure you are working with a lender who has experience with VA loans, and a Realtor with that experience as well.
0 votes
Norberto Vil…, , Colorado Springs, CO
Sun Jul 19, 2009
Usually financed into the loan, the funding fee can range anywhere from .5 - 3.3% depending on the veteran's duty status, amount of the down payment if any, the purpose of the loan, and other factors. None of this should affect the loan's interest rate.

Hope this helps.

Norberto Villanueva, Broker
The Axiom Realty Team ( The ART of Real Estate )
800-951-2919
brokernv@pikespeak-properties.com
Web Reference:  http://www.cosrealty.com
0 votes
Dave Sachle…, Agent, Parker, CO
Mon Apr 13, 2009
Jeffrey,

Here is an article from the Denver Post you may find informative.

Little-down VA loans "best around", an article from The Denver Post, reports that VA loans are finding favor as down payments, not rates, drive more deals. Lenders once considered VA loans too tedious and cumbersome to bother with - now the loans are finding favor. They allow veterans to secure "zero down" 100% financing. Interest rates on VA loans are only slightly higher than conventional financing. A 2.15% fee, which can be rolled into the financed amount, is required for first-time borrowers. The fee is waived for veterans considered at least 10% disabled. The loans are easy to find as most big residential lenders issue them. With VA loans, the seller can rebate up to 6% of the purchase price to cover the buyer's closing costs. Mortgage insurance is not required for VA loans, even with 100% financing.

The Link is: http://www.denverpost.com/economy/ci_12120401

Dave Sachleben
303-909-0545
0 votes
Barb Schiapp…, Agent, Colorado Springs, CO
Mon Apr 13, 2009
Hello Jeffery,
I am not a loan expert but I work with several great lenders who can give you the specifics. I have worked with many VA buyers and this is what I know- Yes it's true that VA loans don't require a down payment but you still have some other costs to think about. Even though the Veterans Administration places limits on closing costs (VA "non-allowables) a veteran can still pay the reasonable and customary amounts for any or all of the itemized fees and charges (which may include VA appraiser and VA compliance inspector fees); and the cost of a second appraisal if so desired by the VETERAN for reconsideration of value; a 1 percent flat charge by the lender, plus reasonable discount points. (The veteran CANNOT pay for an appraisal requested by the lender or seller for reconsideration of value.) Here are some other potential costs allowed by the VA-recording fees, credit report OR a $50 automated underwriting fee in lieu of the credit report. Also prepaid items like taxes and assessments, hazard and flood insurance and surveys (with special limits on condominiums). Other fees allowed include title insurance and title exam, specific mailing fees, mortgage electronic registration fee and certain other fees only if specifically authorized by the VA.

The extra $60 you are asking about is related to the VA funding fee. This is not a set amount but is based on the loan amount and other factors including amount of disability.

The amount of down payment will probably not affect your interest rate but you would need to discuss specific loan amounts with the lender. Some lenders for example, may charge higher interest for a $98000 than for a $100,000, in which case your down payment could make a difference.

All in all, VA loans currently have very low rates and are usually a great way to go, but each situation is different.

If you are not yet working with an agent I would be glad to help you through this somewhat confusing process
and remember that the seller pays for my services. Also... if you're looking for a great deal be sure to check out my website for information about the Military First discount program that I participate and for the most recent listings of short sale and bank owned properties.
0 votes
Eddie Hurt, Agent, Colorado Springs, CO
Mon Apr 13, 2009
The first step is to make sure you are eligible for a VA loan. Generally, almost all veterans are eligible for a VA loan. Some of the qualifying factors include you be active duty with at least 90 consecutive days of service during a major conflict, peacetime vets and active dury personnel with a minimum of 180 consecutive days of service, active duty vets discharged during WWII or later that were not dishonerably discharged, etc... Check out this site to help you get started http://www.homeloans.va.gov/elig1.htm .

I am guessing someone advised you it is prudent to pay extra each month, no matter if you put nothing down or if you do make a downpayment as it can shorten the length of your loan dramatically and save you thousands of dollars over the life of the loan.

Best bet is to speak to a reputable, local lender to get all fo the details including a Good Faith Estimate which will show you all of your expenses as well as what your monthly payment would be. I would be more than happy to put you in touch with a handful if you like.
Web Reference:  http://www.EddieHurt.com
0 votes
Brent Edwards, , Colorado Springs, CO
Mon Apr 13, 2009
Jeffery,

If you qualify for a VA loan your interest rate should not be effected even though you are not coming up with a down payment. Do you have a good lender? If not I can refer you to several excellent ones who can answer every question you have regarding financing and can get you pre-qualified in about 20 minutes. You can email me at brentedwards@remax.net or call me at 719-337-1234. Thanks

Brent Edwards
RE/MAX Advantage Realty
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