Military & Veteran Homebuying: Common VA Loan Questions Answered

Those who have served in the military know it all too well: There’s no place like home. After all, many have grown accustomed to spending long periods of time away from the people and places they love the most.

It’s important to know that the homebuying process often looks different for veterans – and this can be a good thing. Veterans, as well as active-duty military who have met certain thresholds, are able to access unique loan opportunities and maximize their benefits to make housing attainable and sustainable.

Get to know the popular home-financing option from the U.S. Department of Veterans Affairs, known as the VA loan:

A VA loan is an opportunity for the Department of Veteran Affairs to guarantee a portion of a home loan, allowing a private mortgage lender to offer a more competitive financing option. Through this loan, those who qualify can put zero down on the purchase of their house and attain an interest rate lower than other options, like 30-year-fixed or FHA loans.

While this loan type often doesn’t require private mortgage insurance (PMI), it does require a VA funding fee – a one-time fee to the Department of Veteran Affairs ranging from 0.5% to 3.3%. The funding fee percentage varies depending on whether a downpayment was made or not. Purple Heart recipients, those whose spouses died in combat and veterans with disability related to their service are among those exempt from the VA funding fee.

VA loans benefit veterans – but they aren’t just for veterans. In order to be eligible for a VA loan, you must have served for at least 181 days during peacetime or 90 days active duty. This means those who are retired from the military can qualify, as well as active duty who have met the minimum but continue to serve.

“A lot of people don’t realize the sacrifice you make to be in the military. You are away for birthdays and milestones, and life goes on while you’re away. That’s why the VA loan is so important – it helps veterans have stability and buy a home that serves as the backdrop for memories they get to be present for,” says Myra Ramirez, an agent with RE/MAX North in San Antonio, Texas.

Ramirez is familiar with the product on a personal level. Her husband was active-duty Air Force for 10 years with four deployments, and she is currently enlisted in the Air Force National Guard Reserves as a CBRN (Chemical Biological Radiological Nuclear) Emergency Manager. Ramirez is acutely aware of how incentives and exemptions can vary by state.

“Many veterans have retired in Texas because of the benefits for military. If you’re 100% disabled veteran in Texas, you get a property tax break and pay zero property taxes, which can save thousands of dollars per year. However, each state sets their own parameters for qualifications like these,” she says.

The VA loan’s claim to fame – no down payment required – sparks the question: Will the interest rate spike with no money down? The short answer is no. However, a down payment can alleviate other costs, like the VA funding fee mentioned above.

According to Jill Vodicka, an agent with RE/MAX Connections in San Diego, California, veterans have a great opportunity to save that down payment money and use it elsewhere.

“You don’t have to have 20% down to get the lowest rate with the VA. I always explain to my military customers that they could get a VA loan at around 4% and leave their money in savings or mutual funds, which can earn interest,” says Vodicka, who has myriad active duty and retired military family members – including her retired Navy husband – and was in the Coast Guard Reserves herself.

“It’s a common misconception that veterans can’t afford a down payment – many can. Sometimes, if I’m working with a customer putting zero down, I’ll still show some proof of funds to the listing side of the transaction so they know my buyer is truly only doing this because it’s their privilege for serving this country. Then, they can use their money for other things, including a house remodel.”

Veterans can also get creative in adjusting their rate.

 “As a veteran, we have our own version of a 401(k) called a Thrift Savings Plan (TSP). A lot of people don’t realize they can use their TSP money to buy down an interest rate if they’d like to,” Ramirez says.

The VA loan offers numerous benefits to those who qualify, but it’s not a one-size fits-all product or process to attain it. That’s why it’s best to work with a team of professionals who are experts with the loan product.

“The process of buying a home begins with a real estate agent, so it’s extremely important that veteran buyers work with an agent who really understands the ins and outs of the VA loan,” Vodicka says. “From there, we’ll team up with a lender who has vast knowledge on the loan type, too.”

Buying a home while in, or retired from, the military can be complex. Some people, for example, are repeat users of the VA loan, or are purchasing an addition property with this type of financing. For reasons like this and dozens of others, it’s helpful to look for professionals with credentials that show they’re educated and equipped to serve military clients.

“There are plenty of veteran real estate agents, like myself, who can relate to the experience buyers are going through. But there are also plenty of agents who aren’t veterans but are well-versed on the process because of the certifications they’ve earned to serve the community. Buyers should seek out a passionate professional that specializes in veteran customers,” Ramirez says. 

“Going into a military career, so many people don’t know the potential of what you can attain. With the right choices and the right mentorship, you can make smart financial moves and own homes.” 

For active-duty military members leveraging the VA loan, it’s helpful to know that your agent can connect you with a another real estate professional in the next place you’re going to live. After all, these permanent change of station (PCS) orders can come on a moment’s notice – and can happen every few years.

When you choose a local RE/MAX agent for your transaction, you’re working with someone who is part of a global network of professionals, which can make for an easy connection to a trusted RE/MAX agent in your next destination.

“RE/MAX is amazing because if I have a client here that’s PCS-ing to Colorado or to California, all I have to do is head online to find another agent who would be a perfect fit for my buyer. I’ll call the agent, make sure they’re the best fit for the person’s needs, and help make the transfer as easy as possible. Then they can go to their next PCS station knowing there’s a trusted person who’s going to help them and deeply understands the ins and outs of the process,” Ramirez shares.

“If you’re in the military or are a veteran, working with a RE/MAX agent is extremely valuable.”

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