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California VA Loans: 7 Things Every Borrower Should Know

We’ve written a lot about the VA home loan program in the past. As a mortgage company that specializes in VA loans, we enjoy educating homebuyers and borrowers about the many benefits it can provide.

Today, we will summarize some of many articles we publish the past in the form of a fact sheet on California VA loans. Here are seven things borrowers should know about California VA loans.

Seven Things to Know About California VA Loans

Did you know you can buy a house with a VA loan without a down payment? Did you know you could use this program more than once, for a second or third home purchase? Did you know it’s possible to borrow more than $1 million with a California VA loan? Those are just a few of things borrowers should know about this program. So let’s explore.

1. VA home loan dates back to the 1940s.

The VA home loan program was created in 1944, as part of the original Servicemen’s Readjustment Act (commonly known as the GI Bill). It was designed to benefit military service members and veterans, initially those returning from World War II.

According to the Department of Veterans Affairs, the goal was to “diminish to the greatest possible extent the economic and sociological problems of post war readjustments of millions of men and women then serving in the Armed Forces.”

Today, California VA loans facilitate the home-buying process in a number of ways, as we will discuss below.

2. This program eliminates home-buying hurdles.

The VA home loan program is designed to remove some of the hurdles and obstacles to homeownership. By extension, it helps many California military members and veterans achieve their dreams of homeownership.

Some buyers struggle with the upfront costs associated with a home purchase. This is true nationwide, but especially in California where house prices exceed the national average. VA loans eliminate many of those upfront costs, including the down payment.

3. California VA loans offer 100% financing in many cases.

The down payment is by far the biggest financial hurdle for California home buyers. This is especially true in the more expensive real estate markets, like Southern California and the San Francisco Bay Area. The down payment on a median-priced home in California can easily add up to tens of thousands of dollars.

The biggest benefit of using a VA loan is that it allows you to finance up to 100% of the purchase price. That means you could potentially buy a house in California with no down payment whatsoever.

For many borrowers, this benefit accelerates the buying process. It allows them to purchase a home sooner, by reducing the amount of money they have to save.

4. VA loans usually don’t require mortgage insurance.

Home buyers who make a relatively small down payment often have to pay for mortgage insurance. This unique type of insurance is required whenever a home loan accounts for more than 80% of the value.

Granted, there are some benefits to mortgage insurance. It allows people to buy a house with less money down. But it can also increase a homeowner’s monthly payments by several hundred dollars.

Here again, California VA loans deliver significant benefits. Through this program, home buyers can purchase a house with little to no money down, while also avoiding mortgage insurance. That’s a unique combination of benefits you won’t find with other programs.

5. It’s generally easier to qualify for a VA loan.

Mortgage lenders who offer VA loans to borrowers in California and nationwide receive a guarantee from the federal government. This offers an added layer of protection in cases of borrower default.

As a result, this program also has some of the most relaxed qualification criteria you’ll find with any mortgage program. Buyers often have an easier time qualifying for VA loans, when compared to conventional financing.

So you don’t necessarily need perfect credit to qualify for a VA loan. On the contrary, any borrower with decent credit, manageable debt, and sufficient income will likely qualify for this program.

6. You can use a VA loan more than once.

An added benefit offered by California VA loans is the ability to use it more than once. If you finance a home purchase through this program, and later sell the house and pay off the mortgage debt, you will restore your program eligibility. That means you could use another VA loan in the future, as long as you still meet the eligibility requirements.

This is a big deal for California home buyers, mainly due to the 100% financing option. A home buyer who uses a VA loan more than once could avoid making a down payment on subsequent purchases as well.

7. Borrowers with sufficient income could borrow more than $1 million.

California is one of the most expensive states in the country when it comes to home prices. That’s especially true for parts of Southern California and almost all of the San Francisco Bay area. We have a higher percentage of homes that exceed $1 million, when compared to other states across country.

The good news is that borrowers who have sufficient income can use a VA loan to purchase a home well over $1 million. We’ve written about the subject in the past, so be sure to check out this related article if it applies to you.

Questions? Located in the Bay Area, Bridgepoint Funding specializes in the VA loan program and serves the entire state of California. We can answer any questions you might have about using this program to buy a house. Please contact our knowledgeable staff to get started!

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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