The VA home loan program was created in 1944 as part of the original Servicemen’s Readjustment Act, otherwise known as the GI Bill of Rights. Originally aimed at helping those that had sacrificed so much for their country it has been extended through the decades and continues to be as important and helpful as ever to veterans today.
New Jersey VA Home Loans
VA Mortgages
One of the most advantageous things relating to the program is to allow the service member to gain access to a home with no down payment at a very competitive rate and no monthly mortgage insurance. The VA funds and insures its loans through a funding fee that can either be paid in cash at closing or, more commonly, is wrapped into the mortgage. The funding fee requirements break down as follows:
| If Down Payment is… | Funding fee… (% of loan amt. due upfront) | |
|---|---|---|
| First Use: | Less than 5% | 2.30% |
| 5% – 9.99% | 1.65% | |
| 10% or more | 1.40% | |
| After First Use: | Less than 5% | 3.6% |
| 5% – 9.99% | 1.65% | |
| 10% or more | 1.40% |
Certain exclusions such as being a disabled veteran may result in the discount or elimination of the funding fee. If you are a New Jersey veteran, check with the New Jersey VA regarding what funding fee you are eligible for.
Advantages of New Jersey VA Home Loans
- 0% allowable down payment
- No MI payments even at lower credit levels
- More forgiving standards for credit qualifying
- Much more liberal debt to income ratios for lower-income borrowers
- “Cash-out” refinance options up to 100% of property value
- Seller concessions can equate to up to 4% of loan amount even at zero down
- Rates in many cases lower than conventional mortgages
Disadvantages of New Jersey VA Home Loans
- Up Front funding fee due at time of closing. (Premium can be wrapped into the mortgage, however, it still means reduced equity)
- Only available for primary residences. (2nd homes or investment properties not eligible)
- The funding fee is higher for subsequent use.
Get customized VA mortgage rates
For New Jersey veterans and their families (especially those that are first-time homebuyers), New Jersey VA mortgages can offer significant benefits when trying to afford your first home. If you are a veteran, consult your mortgage representative on whether New Jersey VA home loans may be the right solution for you.
