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Benefits of VA Loans

The VA Loan program offers a variety of flexible loan options including fixed rates on 30, 20, and 15-year terms. 5-year adjustable-rate and Jumbo VA loans are also available.

In addition to these flexible loan options, the benefits of VA Loans include:

  • More lenient qualification requirements than traditional mortgages.
  • Ability to refinance up to 100% of your primary home’s value or buy your primary home with no money down.
  • Freedom to pay your mortgage at any time without prepayment penalties.
  • No requirement for PMI (Private Mortgage Insurance)
  • Competitive interest rates since VA loans are partially guaranteed by the government.
  • Option to easily refinance with reduced funding fees and flexible documentation requirements using a VA Streamlined Refinance.

Additionally, if you choose a fixed-rate VA Loan, you’ll enjoy the peace of mind that comes with knowing that your mortgage payment will not change throughout the life of the loan.

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How VA Loans Work

VA Loans, though they’re backed by the federal government, are not made by the government. To take out a VA loan, you’ll work with a private, VA-approved lender. Just like with a conventional 15 or 30-year fixed mortgage, you’ll need to make regular monthly payments with a VA Loan.

What’s unique about VA Loans is that the federal government issues a guarantee to your lender to pay back 25 percent of the loan amount if you default. This decreases the risk for the lender and allows them to offer you a loan with more lenient terms, such as a 0% down payment.

That said, VA Loans do have limitations in terms of how much the government will guarantee. These limitations are based on the Federal Housing Finance Agency’s (FHFA) maximum conforming loan limits—which vary across the country.

In high-cost areas, such as Huntington Beach, these limits exceed $700,000. However, even if you want to buy a home that costs well in excess of $700,000, you can still use a VA Loan. Depending on the total cost of the home, though, you will have to make a down payment to cover 25 percent of the gap between what the VA guarantees and how much the home costs.

Still, with no PMI requirements and the competitive rates of a VA loan, if you’re a current or former member of the military, you shouldn’t let the high price of homes in Orange County stop you from exploring this option.