For most Americans, owning a piece of real estate is more than a dream; it’s a defining milestone in life. It’s when the tables are turned and real portfolio growth begins to take place.
It’s also one of the few loans that individuals take out where equity is actually built. Consider other lines of credit, which are essentially debt multipliers, such as car loans, personal loans, and different types of credit.
However, with a home loan, everything changes because an inflection point occurs, marking the start of slow and steady equity growth. Today, we look at VA home loans made simple for young buyers.
Many vets are incredulous at the prospect of owning a home at a young age. It seems like an unreal prospect, given how difficult it is for the vast majority of the population. But it is a possibility, provided you check all the boxes.
What is the Traditional Home Loan Process for Young Buyers?
If you’ve got the cash on hand, you invariably don’t need a home loan. You can simply pay for your real estate purchase upfront and take ownership then and there. However, the vast majority of people, both young and old, typically require a home loan to purchase real estate.
Given today’s high home prices, with median values hovering around $400,000, financing is often essential. From a non-VA home loan perspective, a down payment is routinely required.
This can range from 3% to 5%, but may increase to as high as 20% if the homebuyer is seeking to avoid private mortgage insurance (PMI).
Every lender is different, and there is a degree of flexibility involved. However, it’s safe to say that the traditional route is complicated. A variety of documents are required, including employment and earnings history, as well as tax returns.
Add to that creditworthiness, seasoned funds, and sometimes even collateral to facilitate the process; it’s a lot to contend with. For traditional home loans, a cosigner may be required if the primary applicant fails to meet the lender’s requirements.
Age often determines how much credit history or earnings background a buyer can show. But most veterans can start their military careers at a young age and complete their service in short order.
The Department of Veterans Affairs offers a range of programs tailored specifically to veterans, including home loans, subject to VA loan eligibility. In the next section, we examine how these loans differ for young veterans.
What Makes a VA Home Loan Different for Young People?
Not everyone qualifies for a VA home loan. However, those who do may enjoy unique benefits. For starters, VA home loans are partially backed by the government, allowing lenders to offer more favorable terms and conditions.
Borrowers, including veterans, service members, and eligible family members, can apply for special benefits that make Owning a Home more attainable.
For example, the down payment requirement of a traditional home loan does not apply with a VA loan. That removes a significant financial burden for veterans wanting to own their own home.
Equally important is the absence of private mortgage insurance (PMI). Eligible veterans can avoid the cost and save thousands of dollars every year. Another benefit is the lower closing costs associated with VA home loans.
The VA funding fee can be rolled into the home loan, and the loan origination fee is limited to one percent of the loan amount. Once the home loan is approved and veterans start building equity in their property, it’s possible to tap into that home equity up to the full value of the home.
Conventional loans rarely match these guarantees, and their interest rates are often higher. Credit reporting requirements are also a consideration – as alluded to above.
Of all the perks young people can enjoy, homeownership is rarely on the radar. However, veterans are a unique class of individuals who put service above self.
Thanks to the VA home loan program, it’s possible for lenders to pay it forward and show appreciation by offering improved terms and conditions through a clearer pathway to veteran homeownership at a young age.
With a valid COE in hand, young veterans can turn their service into a foundation for long-term financial stability. Once all the boxes are checked, it’s a straightforward process to the application.
Owning a Home Young: How VA Home Loans Empower Veterans
For young veterans, the path to homeownership doesn’t have to be out of reach. The VA home loan program bridges the gap between service and stability, removing financial barriers like large down payments and PMI.
With favorable terms, lower interest rates, and government backing, it offers a genuine opportunity to build equity early in life.
By understanding the process and securing a valid COE, young buyers can confidently take their first step toward lasting financial growth and the pride of owning a home.
