Since a decent percentage of airline pilots are veterans, this month we'll discuss the VA loan. The VA loan offers an incredible opportunity to secure a mortgage with favorable terms. As a veteran, reservist or active-duty member of the armed forces, you may qualify for this unique home loan, which can provide significant advantages compared to conventional mortgages. In this article, we'll break down the details of obtaining a VA loan, including what sets it apart, who qualifies, and what you should know about important components like funding fees, appraisals, and beneficial refinancing options.
What Sets the VA Loan Apart?
1. Qualification for a VA Loan
The VA loan is designed exclusively for veterans, active-duty service members, and in some cases, their surviving spouses. To qualify, you need to meet specific service requirements, that typically include:
- 181 days of active service during peacetime
- Serving 90 consecutive days of active service during wartime
- Six years in the National Guard or Reserves
Pilots with prior military service often meet these eligibility criteria, making the VA loan a fantastic option if you’re looking for a home loan with favorable terms.
2. VA Loan Rates
VA loans often come with lower interest rates than conventional mortgages. This is due to the government guarantee that backs VA loans, reducing the risk for lenders. As a result, even in a fluctuating market, VA loans tend to offer more stability—a huge plus for pilots whose income can vary with fluctuating schedules or time away from flying.
3. Funding Fee and Exemptions
One unique aspect of the VA loan is the funding fee, which helps support the program for future veterans. This fee varies based on several factors, such as your down payment amount and whether it’s your first time using a VA loan. You can find the most recent VA funding-fee tables on the official VA website or through your lender. Keep in mind, some veterans are exempt from the funding fee, particularly if they have a service-connected disability rating. If you're exempt, make sure to confirm your status when discussing loan terms with your lender.
4. No Down-Payment Requirement
One of the biggest draws of a VA loan is the no down-payment requirement, meaning you can purchase a home without the need for upfront cash. This is a huge advantage compared to conventional loans, where a 20% down payment is often required to avoid private mortgage insurance (PMI).
VA Appraisals: Understanding the Process
The VA loan program requires a VA-specific appraisal to ensure the home meets certain standards. Unlike a typical appraisal, the VA appraisal includes not only an assessment of the property’s value but also a check to ensure it meets Minimum Property Requirements (MPRs). This can sometimes result in additional repairs being necessary before closing, so it's essential to be aware of potential costs and timelines involved.
Refinancing with the IRRRL
If you already have a VA loan, you might want to explore refinancing through the Interest Rate Reduction Refinance Loan (IRRRL). The IRRRL is designed to make it easier for you to refinance to a lower interest rate with minimal hassle. There’s typically no appraisal or credit underwriting needed for the IRRRL, making it a fast and streamlined option. The IRRRL does not become eligible on your current VA loan until 210 days after your first VA loan payment, and the new rate must be at least 0.5% lower than your current rate.
The Certificate of Eligibility (COE)
To qualify for a VA loan, you need to obtain a Certificate of Eligibility (COE) from the VA. This document confirms your eligibility and is a crucial step in the loan process. Most lenders can request your COE electronically, but you can also apply for it directly through the VA's eBenefits portal.
One common question among pilots and veterans is, “What if I’ve used my COE before? Can I still use it for another VA loan?” The answer is yes—your COE can be used multiple times, if your previous loan has been paid off or if you meet specific circumstances allowing for a second VA loan. For example, you can have more than one VA loan at a time under certain conditions, such as using your remaining entitlement. This could be particularly useful if you're relocating due to a new assignment or simply upgrading your current home.
Final Thoughts
For airline pilots who are also veterans, the VA loan offers incredible flexibility and benefits that are difficult to match with conventional loan options. From lower interest rates to no down payment, and the potential for refinancing through the IRRRL, the VA loan is an invaluable tool for securing a mortgage. Take the time to ensure you understand your eligibility, funding-fee exemptions, and how your COE works to get the most out of this opportunity. Working with a lender who specializes in airline-pilot pay and VA loans is crucial to ensuring you get the best deal for you and your family.
Trident Home Loans (Equal Housing Lender, NMLS 65716) is an airline industry leader for securing the right mortgage for you. Contact Spencer Wartman (NMLS 2109932) at [email protected] or spencerattrident.com and let him help you secure your future home! Also, feel free to reach out to Spencer directly if there’s a topic upon which you’d like for him to report.
Trident Home Loans, NMLS ID 65716, Corporate Office located at 6723 Plantation Rd, Pensacola, FL 32504. Any offers or advertisements for mortgage products on our website or other platforms are subject to conditional approval. The actual terms and conditions of a mortgage loan, including interest rates, loan amounts, and eligibility, are dependent upon several factors, including the borrower's creditworthiness. Trident Home Loans reserves the right to modify or revoke any offer, and final approval is contingent upon the completion of a full application, verification of information provided, and meeting all underwriting requirements. For information regarding our licensing, you can visit our website at www.Tridenthomeloans.com.Trident Home Loans is an Equal Housing Lender. Please note that this disclaimer is provided for informational purposes and may be subject to updates or changes in accordance with regulatory requirements. Borrowers are encouraged to contact Trident Home Loans directly for the most up-to-date and accurate information regarding mortgage products and offerings. This advertisement is not an offer to lend, and all applications are subject to credit approval. Terms and conditions may apply.
