If you’re a member of the U.S. Armed Forces, a veteran (retired or not), a defense contractor or a qualifying dependent, you could be eligible to buy a home for sale in Midland using a VA loan. But what is a VA loan, and how does it work? Here’s what you need to know.

Related: Midland, TX relocation guide

VA Loan Guide for Buying a Home in Midland, TX

Buying a home with a VA loan can be a great opportunity. This VA loan guide explains everything you need to know about using the benefit and getting into your dream home in Midland.

How Do You Get a VA Loan?

You must get a Certificate of Eligibility from the Department of Veterans Affairs if you want to take out a VA loan. You can get your CoE here.

When you have your CoE, you can talk to a number of lenders about your situation. Let them know you’re interested in buying a home with a VA loan, present your representative with your CoE, and he or she will take it from there. (If you need help finding a good local lender, talk to your Midland REALTOR®.)

VA Loan Guide for Buying a Home in Midland, TX - VA Loan
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Who Qualifies for a VA Loan?

You (or in some cases, your spouse) must meet basic service requirements put out by the VA if you want to use a VA loan. Generally, you have to meet one or more of these four requirements:

  1. You served 90 consecutive days of active service during wartime
  2. You served 181 days of active service during peacetime
  3. You have 6 years of service in the National Guard or Reserves
  4. You are the spouse of a service member who died in the line of duty or as a result of a service-related disability

What if You Don’t Meet the Service Requirements?

In some cases, you may still qualify for a VA loan to buy a home in Midland. For example, if you were discharged from the military for one of these reasons, you could still be eligible:

  • Hardship
  • The convenience of the government
  • Early out
  • Reduction in force
  • Certain medical conditions
  • A service-connected disability

You may also be eligible for a VA loan as a surviving spouse or if you served as a member in certain organizations, such as:

  • Public Health Service officer
  • Cadet at the U.S. Military, Air Force or Coast Guard Academy
  • Midshipman at the U.S. Naval Academy
  • Officer at the National Oceanic & Atmospheric Administration
  • Merchant seaman during World War II

What Can You Use a VA Loan For?

You can use your VA loan benefit to buy a primary residence. They’re not really good options for “fixer-uppers” because you can only borrow the amount that an appraiser says the house is worth (not repair costs). You can also use them to buy a:

  • Single-family home with up to four units
  • Condo in a VA-approved development
  • Manufactured home
  • New construction

You can even use a VA loan to make changes to your existing home or add new features that make your home more energy efficient.

VA Loan Guide for Buying a Home in Midland, TX.- In office
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Benefits of VA Loans

Not everyone qualifies for a VA loan – they’re reserved for members of the Armed Forces, veterans and a handful of others. For those who qualify, though, these loans are packed with great benefits, including:

  • The ability to buy a home with nothing down
  • No private mortgage insurance requirement
  • No prepayment penalties
  • Competitive interest rates
  • No minimum credit score

Nothing Down

You can buy a home with $0 down if you use a VA loan. However, if you do put money down, it can lower your monthly payments (because you’re borrowing less money from your lender) and may even qualify you for lower interest rates.

No PMI

Lenders can’t make you buy private mortgage insurance if you’re using a VA loan. The government guarantees part of these loans, which means Uncle Sam will ensure the lender gets paid even if you fail to make payments on the home.

No Prepayment Penalties

You can pay off a VA loan as early as you’d like without facing prepayment penalties. Ordinarily, lenders charge prepayment penalties in an effort to recoup some of the cash they’re not making on interest over the lifetime of a loan – but that’s not the case when the Veterans Administration is backing your loan.

Competitive Interest Rates

Because the government backs VA loans, lenders can offer borrowers a competitive interest rate. In fact, because the lender is taking on less risk by lending to you through the VA loan program, it’s likely to offer you better interest rates than you’d get with a conventional loan.

No Minimum Credit Score

You don’t have to have a certain minimum credit score to use a VA loan. Your lender likely has a low-end threshold, though. However, your lender can’t turn you down for a VA loan just because of your credit score; the VA requires lenders to look at a potential borrower’s entire financial picture before making a lending decision.

What is a VA Loan Funding Fee?

When you use a VA loan benefit, you have to pay a VA funding fee. This money goes directly to the VA to ensure that the program keeps running for future veterans and military buyers. It’s usually about 2.3 percent of a home’s purchase price, and it’s one of the closing costs you’ll have to pay unless you roll it into your overall loan amount.

Are You Buying or Selling a Home in Midland, Texas?

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