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VA Home Loans Explained

Buying and financing a home in Alpharetta, GA with as little money down as possible can be accomplished with the VA home loan program. With a VA mortgage, there is no need for a down payment at all. There is only one other zero down program, one offered by the USDA, but that program is only designed to finance properties in rural areas. With the VA loan, there are no such geographical restrictions.

In addition, the veteran is restricted from paying certain types of closing costs which also reduces the amount of funds needed at the settlement table. The veteran is only allowed to pay for an appraisal, credit report, title, origination and recording fees. Other fees such as an attorney or escrow charge must be paid for by the sellers or with a lender credit.

But the program isn’t limited to just a veteran of the armed forces. Others are also eligible. In addition to veterans, eligible borrowers include active duty personnel with at least 181 days of service, National Guard and Armed Forces Reserve members with at least six years of service and unremarried surviving spouses of those who died while serving or as a result of service-related injury.

The VA home loan can be used to finance any type of residential property from a single family home to a 2-4 unit property to a condominium. The only requirement is the loan cannot be used to finance a rental property and can only be used to finance a home to be used as a primary residence.

The loan also comes with a guarantee to the lender. Should the loan ever go into default, which is rare for a VA loan, the lender is compensated at 25% of the loss. This compensation is financed by what is known as the Funding Fee which for most first time purchases is 2.15% of the loan amount and can be rolled into the loan without being paid for out of pocket. Finally, the VA home loan program comes with some very competitive rates with terms ranging from 10 to 30 years.

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