For faithfully serving this Great Country, the VA wants to help you settle down with your family. They provide financial backing through the VA Loan for your dream home without requiring a down payment and private mortgage insurance (PMI).
If you’re a vet or active duty service member, that means you qualify for the VA Loan. But what will your monthly payments look like and what factors contribute to the total loan amount?
When working with an experienced lender, it’s important to know these numbers so you can get the most affordable rate. Your family deserves to be eligible for the home you’ve always wanted and the VA Loan has to accomplish that mission.
Below is a simple VA mortgage calculator and some factors that affect your monthly payments.
How does the VA loan program work?
The Department of Veteran Affairs (VA) provides financial support for your dream home with the VA Loan and rewards past or current military service.
The backing allows private lenders to reduce credit score requirements and eliminate the need for a down payment.
If you’re eligible, the first step is to share the certificate of eligibility with a private lender or bank. A 2002 qualified borrower can obtain a VA Loan up to $647,200 without a down payment in most counties.
You are eligible to borrow as much as a VA approved lender provides, but anything higher than the VA loan limit requires extra cash.
What are the variables that determine my mortgage amount and terms?
VA lenders take several factors into consideration when determining the total mortgage.
We’ve listed them below to help you while searching for the home your family has always wanted. In almost every case, you’ll need to watch for the home’s price, loan length, and interest rates closely.
Home price
The base home price has a significant impact on your VA loan payments and total mortgage. Assuming you don’t make a down payment, the property’s cost serves as the foundation for affecting what type of home you’ll qualify for.
Closing fees
For most residences, your closing costs can add up to well over $10,000. Some examples include title insurance, appraisal fees, real estate property taxes, recording fees, and more.
You should pay as many upfront as possible, but a lender can also roll them into the VA Home Loan.
VA funding fee
While most vets and active duty service members don’t have to make a down payment, most will pay the VA funding fee. It can be as high as 3.6% of the VA loan amount.
Thankfully, surviving spouses do not have to pay the funding fee and there are other exceptions for qualifying military.
Down payment
With the VA Loan, you can obtain the best real estate properties on the market without a 0% down payment. This is useful if you need an affordable way to purchase a home without immediate cash in hand.
However, your monthly mortgage decreases and even reduces your loan terms if you do choose to put money down.
Interest rate
Aside from the base home price, the interest rate on your mortgage loan will have the most significant impact on your monthly payments.
While your credit score, down payment, and chosen lender will all affect your interest rate, national economic trends dictate the interest rate ranges.
Credit score
The VA’s backing allows vets and other eligible military to obtain a home with less strict credit score requirements. While most lenders demand at least 620, the VA Loan drops that number to 580.
But the higher your credit score, the better your loan terms will be.
Loan length
Deciding between a 15 or 30-year loan significantly impacts your monthly rates and total loan amount.
Experienced lenders will tell you that interest skyrockets over the VA Loan’s duration, even with lower monthly payments.
How much will my monthly VA mortgage payment be?
Let’s run through a few simple examples. It’s important to note that any calculations or estimates include assumptions about homeowners insurance, mortgage rates, and more.
Example 1: $200,000 home, 30-year mortgage, 0% down payment, 2.3% funding fee, 5.41% interest rate
In this example, the borrower pays more in interest than principal on the VA Loan. The monthly payment would be approximately $1,150, and they would pay $209,461 total interest over the 30-year program.
Example 2: $450,000 home, 15-year mortgage, 15% down payment, 1.4% funding fee, 5.41% interest rate
The borrower would spend less on the VA Loan’s interest ($179,254) than half of the total mortgage ($225,000). Even with the down payment, the monthly payment would equate to $3,150.
We Calculate Your VA Loan Amount
It is important you consult with a qualified VA lender to ensure that you obtain the best financing for your dream home.
We recommend partnering with our military-run team that has helped thousands of veterans and active duty service members with their home buying needs. They’ve moved into the homes they’ve always wanted for an affordable price.
Contact Jimmy Vercellino by calling his personal cell at (602)-908-5849. You deserve to enjoy the rest of your military service and your retirement. We’re here to take you through the VA Loan Journey and make that a reality.
