3 Reasons Millennial Buyers Love VA Loans
According to new reports, increasing numbers of millennials are following the path to home ownership. Some of them serve in the military, which means they might be able to use their VA loan benefits to purchase a home. As a young homebuyer looking for the most advantageous mortgage options, here is what you need to know about the benefits of VA loans for millennial homebuyers.
Low or No Down Payment
Coming up with the cash to make a 20-percent down payment on a home is a major hurdle for many millennial homebuyers. Unsurprisingly, most of them prefer mortgages that don’t require a lot of money upfront. For an eligible borrower, a VA loan without any down payment is the best way to purchase a home and avoid the dreaded 20-percent down payment. However, lenders might still require a down payment when loan amounts exceed county limits or when borrowers have insufficient VA entitlement.
No Private Mortgage Insurance (PMI)
On average, conventional mortgages require a down payment of 20 percent. But the good news is that lenders make available different mortgage products with down payments below that threshold. Depending on the income, credit score and employment history of each applicant, some lenders might also be willing to negotiate the down payment amount.
On the downside, lower down payments can increase the costs of a mortgage in more than one way. In addition to potentially having to pay higher interest rates and closing costs, most borrowers will need to take out PMI. Since the millennial homebuyers who are eligible for the VA loan program don’t need to make a down payment and pay PMI, they can save a significant amount of money.
Flexible Underwriting Requirements
The flexible credit guidelines associated with VA loans is another reason why millennial homebuyers love these types of mortgages. To qualify for a VA loan, an applicant must have a credit score of at least 620 and sufficient income to fully cover all financial obligations. Another great advantage of opting for this mortgage program is that the VA can advocate on behalf of homeowners when they’re unable to repay their loans.
Because the VA loan program offers such flexible guidelines, a millennial borrower might be able to qualify even if he or she has been turned down for another type of mortgage. Another noteworthy point is that not only active-duty and retired service members can qualify for these loans. The list of eligible VA borrowers also includes cadets at the U.S. Military, Air Force Academy or Coast Guard Academy, officers at National Oceanic and Atmospheric Administration, and midshipmen at the U.S. Naval Academy.
Considering all these benefits, VA loans offer a valid credit option for many millennial homebuyers serving in the military. In addition, as a reputable home builder and realtor serving Northwest Florida, Whitworth Builders makes available a special program for military homebuyers, which covers the closing costs when buying a home with the help of a VA loan from our preferred mortgage lenders.
What’s more, if you’re looking for your dream home, Whitworth Builders can help you get the perfect “match” for your lifestyle and budget, so you can enjoy the best of Florida living. If you’re looking for a home financing solution that fits into your overall financial picture, our preferred lenders offer VA loans as well as other financing alternatives that can meet the mortgage needs of almost any homebuyer.