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Government programs help veterans buy homes

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Posted: Friday, May 9, 2014 6:55 am

There are a number of government programs for veterans that will help you buy a home. If you have been honorably discharged from service, have reasonable credit and an income, you will likely qualify for a home loan guarantee from an agency for veterans affairs.

One option will be the U.S. Department of Veterans Affairs and its VA home loan program. Another option may be your state department of veteran’s affairs, such as the California Department of Veterans Affairs CalVet home loan program.

The VA home loan program and the CalVet home loan program are both options to make a mortgage more affordable for military veterans. With a VA loan, the program is not extending the loan itself. Instead, the government agency is offering security on a private loan you have secured. Because the agency offers this security, often called a guarantee or insurance, you will receive better financing terms and more accessibility to mortgages. With the CalVet loan, the department is the lender. This means you will receive a loan directly from the CalVet, and they will set standards for credit and income.

Eligibility for either the VA loan or the CalVet loan will depend in part on your credit and loan history. In both instances, if you have defaulted on a loan from the organization in the past, you will not be eligible immediately. For the VA loan, your eligibility depends on your status with the U.S. Armed Forces. You must be either active duty or honorably discharged. For the CalVet loan, there are similar requirements. You will face the same service requirements and you must also be a resident of California intending to purchase a home in the state. However, since the CalVet loan is direct from the CalVA, you will face more credit requirements directly from the department with this option.

The key benefit to a VA or CalVet loan is the financial assistance it provides. First, you will have lower down payment requirements. VA home loans can reduce a down payment requirement to just 3.5 percent. You will also have a guaranteed fixed interest rate with both loans. This means your payments will never go up unexpectedly. The VA home loan program offers streamlined refinancing in the future, but the CalVet program does not allow refinancing.

To obtain either a VA loan or a CalVet loan, you will need a copy of your DD214 (Release from Active Duty) in order to qualify. If you are still on active duty, your military ID will suffice. Next, you can go straight to the VA or the CalVA in order to obtain an application or you can consult a local lender who processes these loans. Both programs require the home to meet basic requirements. With a CalVet loan, you will need to sign a Contract of Sale with the CalVet, and you will further need to meet requirements for safety and insurance.

These loans have again become a popular choice by active military and veteran’s as well. The “no down payment” and the ability to finance some of the fees make these loans a popular choice. Loan limits vary by county, VA loan limits for San Joaquin County are $417,000 and CalVet loan limits are $512,000. These loan limits may be lower for first time home buyers. Please consult a lender to see if you qualify for these fabulous loans.

Eileen Schamber is the president of the Lodi Association of Realtors and can be reached at president@yourlocalaor.com.

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