If you’re reading this, you’re likely a veteran of the United States Armed Forces. Thank you for your service!
We are here to assist you in your home-buying journey. To get started, we’ll need your DD214, as it’s essential for obtaining your Certificate of Eligibility (COE) from the Veterans Administration. Don’t worry—I’ll handle this step for you!
It’s important to know that while the VA loan is backed by the Veterans Administration, it is not issued by them. The VA guarantees 25% of the loan limit, which eliminates the need for mortgage insurance.
In San Bernardino and Riverside Counties, the loan limit is set at $424,100, meaning the VA covers $106,025. This figure is crucial, especially if you’re considering purchasing a home in areas like Corona or Rancho Cucamonga.
Please note that $424,100 is not the maximum amount you can borrow with a VA loan—it represents the limit for zero down payment. If you wish to purchase a home exceeding this amount, you’ll need to contribute 25% of the difference. For example, if you’re looking at a $500,000 home, the first $424,100 is covered by the VA with no down payment required. The difference of $75,900 ($500,000 – $424,100) would require a 25% down payment, which amounts to $18,975.
Thus, with a VA loan, you could buy a $500,000 home in San Bernardino or Riverside County by putting down just $18,975. This is particularly relevant for homebuyers in Corona or Rancho Cucamonga.
The absence of mortgage insurance with a VA loan is because the VA effectively acts as the insurer. Banks assess risk based on the amount of money down—less down means higher risk, and more down means lower risk. If a bank has to foreclose on a property, they face significant costs, which can include months of missed payments, legal fees, and repair costs, totaling around $35,000.
In contrast, FHA loans require mandatory mortgage insurance, and conventional loans necessitate 20% down to avoid it. If you were to buy a $500,000 home with a conventional loan, you’d need to provide $125,000 to bypass mortgage insurance. Even with this substantial down payment, VA interest rates often remain more favorable.
As a veteran, my primary goal is to secure the best interest rates available for you. Let’s make this process as smooth as possible!
VA Funding Fee
The primary drawback of a VA loan is the “VA Funding Fee.” However, if you are classified as “service-connected,” this fee is waived. You can find the funding fee tables HERE.
Generally, the VA funding fee is 2.15% for first-time users and 3.3% for subsequent uses.
For example, with the loan limit in San Bernardino and Riverside County set at $424,100, the fee for a first-time user would be calculated as follows: $424,100 x 2.15% = $9,118.15. If this is your second use or beyond, the fee would rise to $424,100 x 3.3% = $13,995.30. Understanding these costs is especially important if you’re looking to buy a home in places like Corona or Rancho Cucamonga.
Is the fee worth it? In my opinion, absolutely. Here’s why: VA loans typically offer interest rates that are 0.5% to 0.75% lower than conventional loans. At the $424,100 loan amount, this means monthly savings of about $100 to $200. Over the course of a year, that adds up to $2,400. Over ten years, you’re looking at $24,000 in savings, and over 30 years, that could potentially total $72,000—all thanks to the competitive rates available with a VA loan.
Additionally, the funding fee can be rolled into the loan, meaning you don’t have to pay it upfront at closing. Often, the interest on this fee is tax-deductible, making it a more manageable expense.
While there are many advantages to a VA loan, having an inexperienced loan officer can lead to challenges. But don’t worry—I’m here to guide you through the process and ensure it’s smooth sailing!