Are You Maximizing Your VA Loan Benefits?
Current, retired and eligible U.S. military service members have a significant leg up when buying a home in Hawaii. Guaranteed by the Department of Veterans Affairs, VA loans allow veterans, active-duty service members, National Guard and Reserve members and, in some cases, military spouses, to purchase a home with no down payment.
In addition to offering buyers 100 percent financing, VA loans have several unique benefits. Unlike traditional loans — which require Private Mortgage Insurance, or PMI, for loans greater than 80 percent of the home’s value — lenders do not require buyers using a VA loan to purchase PMI if they put down less than the standard 20 percent.
It’s also easier to qualify for a VA loan than a traditional loan because VA loans are guaranteed by the government. Lenders are able to offer more competitive interest rates and lower closing costs to buyers who qualify for a VA loan, too.
The benefits of a VA loan extend beyond the purchase of an existing home, as the loans can be used to build a new home, simultaneously purchase and improve a home, or upgrade a current home’s energy efficiency.
While there is no maximum purchase amount when using VA loans, the VA loan limit is the maximum amount that can be fully financed. This limit is determined each year based on sales figures from the Federal Housing Commission. A purchase amount greater than those limits requires a down payment of the amount greater than the maximum loan limit.
The current loan limit for Honolulu County is $721,050 — one of the highest in the nation — and hovers right around Oahu’s median single-family home price of $720,000 for April 2017.
“The VA loan limit of $721,050 typically doesn’t discourage buyers, as many buyers can still find a single-family home priced below the median in many of the neighborhoods surrounding Hawaii’s military bases,” said Chad Takesue, senior vice president of sales and Realtor at Locations. “Hawaii’s VA loan limits are very generous — and a great way to own a piece of paradise while building future wealth.”
VA loan rates are favorable for buyers, too. “The current APR for a 30-year fixed VA loan is between 3.5 percent and 4.25 percent, depending on the buyer’s credit score, loan amount, VA Funding Fee and other closing costs,” said Jay Miller, home loan originator at Compass Home Loans LLC.
Active-duty service members have an additional advantage when it comes to purchasing a home: Basic Allowance for Housing, or BAH, can be put toward monthly mortgage costs. On Oahu, service members with dependents are entitled to as much as $3,942 per month.
Because not all properties will qualify for a VA loan, buyers should work with a Realtor who understands the ins and outs of VA loans to save time and money. Condo-buyers should be aware that not all condo buildings are eligible for VA financing. Prospective military buyers can visit locationshawaii.com/militaryteam to find a military specialist who can walk them through the process of home-buying with a VA loan.
With Hawaii’s high VA loan limits and near-historically low interest rates, now’s a great time for military service members to invest in homeownership.
To learn more about VA loans, visit locationshawaii.com/valoans.