Millennials are using VA loans much more than previous generations – creating a renaissance for the long running program. Last year, one third of all VA loans were used by millennials.
A notoriously cash-strapped generation – coming of age in a time of tight credit, flat wages, and ballooning housing prices – they find their savings where they can. If you’re an eligible millennial wanting to escape the endless cycle of rent payments, a VA loan is an amazing option.
Why are millennials attracted to VA Loans?
The simple answer is: Money. VA Loans are a great deal. But, to be more specific, there are three reasons millennials are making use of these loans.
Zero down payment
The biggest and most obvious advantage of a VA loan is that a down payment is not required, making it easy for someone without much in the way of savings to afford a home. You can afford up to a 424,000 dollar loan (or even more in some markets) without having to worry about a costly down payment.
FHA loans, which are designed to be attractive to first-time buyers, do require down payments of 3.5% or more. In the case of the average first time home loan, that’s about 12,000 dollars.
Given this, a VA loan provides a significant hand up to those who have served their country.
No Mortgage Insurance Required
Another significant boon to the young homebuyer is the lack of a mortgage insurance requirement. Most loan types require either a large down payment, or mortgage insurance to protect the lender from risk. VA loans, backed by the US government, require neither.
For a typical FHA loan, annual mortgage insurance is just under 1% of the value of the loan. Even divided over twelve months, this monthly payment will put a dent in a typical household’s budget. A VA loan circumvents these payments entirely.
Those who qualify for VA loans are responsible for a small payment to the VA, but compared to the cost of Mortgage Insurance, this is barely worth mentioning.
Easier to qualify for
Besides the obvious stipulation that only veterans and the spouses of veterans can qualify for VA loans, this program is much more forgiving and flexible with most requirements.
For instance, lower credit scores are required to qualify for a VA loan. What’s more, the VA is there to help veterans who have trouble making payments. For these reasons, VA loans have the lowest rates of foreclosure on the market of any loan type.
If you are a millennial who has served your country, it’s time for the count to give back. A VA loan can help you get ahead. If you’d like to find out more, check out our page on VA loans. Or contact Redding Megastar if you have questions.