A Comprehensive Guide to Different Types of VA Loans

Coming up with the down payment of the home can be overwhelming for first-time home buyers. But, thanks to the VA Loans, home buying is now possible for veterans, service members, and their families without a down payment. A lot of lenders require insurance if the down payment is less than 30%. However, with a VA loan, there is no need to put any money down and not pay for the mortgage insurance. While there are certain fees that one needs to be aware of. 

VA Loans from Florida Mortgage Company is not just for buying a house but also for a refinance or home renovation. Here is a comprehensive guide on everything you should know about the VA Loans and their types.

What do you mean by a VA Loan?

A VA Loan from Florida Mortgage Lenders is issued as a bank or credit union and backed by the federal government and not issued through the department of veterans affairs itself. But, thanks to the home loans’ federal backing, VA loans are of less risk to the lenders and require less upfront investment by the potential borrowers. Just like other government-backed loans, the government provides some guarantee to the lender that it will recover some if not all the money in case any situation comes up when the homeowner is not able to make any payments and the home goes into foreclosure. This allows Florida Mortgage Lending to provide the applicants’ loan under favorable terms as compared to conventional or FHA loan programs.

Offering a significant source of financial aid to veterans and service members, VA loans are easier to qualify than most other programs. They can be used to finance home upgrades and renovations or cash out the equity that can be possessed in the house. VA loans are calculated using a different formula when calculating the applicant’s DTI ratio which also helps in qualifying the borrowers to afford larger homes with extra amenities. 

As compared to other types of mortgages, VA loans will not need any down payment and credit score details. There are different types of VA loans available with Florida Home Loans and every type comes with its own set of benefits and drawbacks. If eligible to get one, the borrower gets an opportunity to apply for a VA Loan through a qualified lender of the individual’s choice and preferences. 

What types of VA Loans are available at Florida Mortgage Company?

There are different types of VA Loans available and the one you should go for depends on the current stage you are at on your journey to homeownership. When it comes to VA Loans, all you need is a COE that you will show to your Florida Mortgage Lenders

No matter what type of VA Loans you choose, all of them have funding fees based on how much you put down. Another factor that influences your funding fee is the number of times you have used your COE. Borrowers with disabilities or those with Purple Heart can get the funding fee waived. 

Below mentioned are the different types of VA Loans available –

  • VA Purchase Loans

This type of VA Loan is designed to buy an existing property. In general, people who want to purchase a property as their primary residence can purchase this property. It is possible to buy a property that has 4 units, for example, if you wish to rent out other units. The only condition is that you should live in one of those units so that you can call the residence your primary residence. 

For first-time home buyers, the VA Purchase loans area is a great option. The VA purchase loans guarantee the lenders that the buyers still qualify even if they have low credit scores.

  • VA Cash-out refinance

If you have built up equity in the house and you wish for immediate cash, cash-out refinance is the only way to go about it. Florida home loans suggest using VA Cash-out refinance for refinancing a loan that may have a higher interest rate or take up the entire equity built up. 

Whether or not you can use the COE on the cash-out refinance entirely depends on if or not you have used it in the past. If you wish to refinance a VA Loan, you are eligible to cash out the amount equal to the amount you have paid down. But, if you have a conventional loan or any other type of loan on the house and you wish to use VA cash-out refinance, you must take full advantage of your COE.

  • VA IRRRL (Interest Rate Reduction Refinance Loan)

The IRRRL offers a streamlined process that helps you refinance your already existing VA home loans. IRRRL can be a good choice if you want to opt for a lower interest rate or low monthly payments. You also have the option of refinancing your VA Loan at no cost if you qualify for the funding fee waiver.  Apart from that, if you can certify that the residence in question is your primary residence, you can qualify for the IRRRL even if you are not living in that property. This is also useful for active-duty military families who transfer to new destinations because of their changing duties. They still own the property and so can take the advantage of low-interest rates. 

  • VA Home Renovations and Improvement Loans

A VA Home Renovation loan can be a great option if you wish to renovate a house that does not meet the strict standards required for a VA Purchase Loan. A portion of that loan can be used to bring up the home standards to those after purchasing. But, the homeowners are required to use a VA-approved contractor and additional VA appraisal for the after renovation value. The loan can only be used to bring up the home standards. Homeowners do not have the option to add a new structure or build luxuries. 

For home improvements on the existing home, you can look at other loan products offered by the lender. Instead of using VA Loans to make home improvements, it is possible to use a conventional home improvement loan. And once the entire improvement is done, and the home value increases, you can use a VA cash-out refinance to pay it off. 

Which type of VA Loan is right for you?

When deciding the type of VA loan, it is very important to understand how every loan works and then figure out the one that works for you. You must sit down and talk to your Florida Mortgage Company who will help you work out what is the best for you.  


Mortgage loan officer at 1st Florida Mortgage.

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