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Veteran’s Guide to Saving on Housing Costs

Jackie Nelson

Jackie Nelson

Feature Writer

11 min. read

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Veterans have sacrificed so much for the safety of our country. As a way to say thank you, many organizations, retailers, and companies offer discounts or programs to make buying and owning a home more affordable for those who have served. If you’re a veteran of the U.S. military, there are many ways you can score great savings on housing costs. From mortgage rates and home improvement to accessibility grants and discounted home insurance, you’ve got lots of unique options to explore when it comes to buying a house.

In this article:

Save With a VA Loan

The first, and perhaps the biggest, step in saving on your housing costs is to take advantage of the VA (Veterans Affairs) loan program. Getting a VA loan may seem like a no-brainer, but surveys have shown a third of veterans were unaware of the VA loan program. While we encourage you to seek quotes and options from multiple mortgage companies, there are some definite advantages of getting a VA loan over a traditional mortgage. Most impactful – the money you could save on your new home.

VA Loan FAQ

What is a VA loan?

The VA loan is an earned benefit of working for the U.S. Military. VA loans are backed by the Department of Veteran Affairs, which makes them a very desirable arrangement for lenders since the government is on the hook for a percentage of the loan if you default on your payments.

These home loans allow for easier access to housing because they’re the easiest to finance. The VA loan is one of the only types of loans that doesn’t require a down payment and it generally has more lenient credit and income requirements.

What are the perks of a VA loan?

  • Save on your down payment. The VA provides more favorable loan terms, including no down payment as long as the sales price doesn’t exceed the appraised value. Down payments can typically be as high as 20% or more of the home’s purchase price with a conventional home loan.
     
  • Save on your next home. Although the VA loan can only be used for your primary residence, it’s a benefit that can be used again and again. If you want to upgrade to a bigger home later on, you can use the VA loan program again.
     
  • Save on your mortgage rates. VA loans are known for their affordability and for having the lowest rates in the market. This corresponds to their stable government backing.
    Save on additional home buying fees, which aren’t allowed with VA loans.
     
  • Save on private mortgage insurance (PMI). While conventional loans with less than 20% down and FHA loans require PMI coverage, VA loans don’t require this type of homeowners insurance.
     

Am I eligible for a VA loan?

  • If you’ve served in the United States armed forces, generally speaking, you’re eligible for a VA loan. You may qualify to apply for a VA loan if you:
  • Served active duty for 181 days during peacetime
  • Served 90 consecutive days of active service during wartime
  • Are a member of the Reserve or National Guard (eligible to apply after six years)
  • Are married to a service member who died in the line of duty or as a result of a military-related disability
  • In addition to these requirements, you also must meet the standard lender requirements for a mortgage. These requirements usually include information such as your income, credit score, and debt-to-income (DTI) ratio.

How does a VA loan work?

The VA loan can seem complicated, but it can be worth the extra steps in the long run to look into it. Here’s a brief overview of the process of securing a VA loan for your new home:

1. Prove you’re able to apply by obtaining a Certificate of Eligibility (COE).

Veterans will need a copy of their discharge or separation papers (DD Form 214) to get their COE. Eligible spouses will need the VA Form 26-1817. If you’d like assistance in this process, a lender may be able to take this task off your plate. Questioning your eligibility? Always check with a VA-approved lender or the VA itself to make sure you’re not missing out on the opportunity for the VA loan benefit.

Rob Greenbaum is the VP of AAFMAA Mortgage Services, which exclusively serves military and veteran home buyers. Greenbaum suggests you “ask your loan officer early in the process what documentation is required to ensure you have time to access everything – you don’t want to be delayed in the approval process because of paperwork issues.”

“You can identify ways to cut costs by comparing multiple lenders early on in the process – look at the terms, rates, discount points, and closing costs.”

Rob Greenbaum
VP, AAFMAA Mortgage Services

2. Choose a VA-approved lender.

This will be a personal choice based on your unique financial situation and preferences. Although there isn’t one overarching VA-approved lender list, Quicken is a good place to start based on our research on the best mortgage lenders. Once you choose a lender, you can get pre-approved to determine how much you can finance.

When it comes to evaluating your options, Greenbaum also recommends “you can identify ways to cut costs by comparing multiple lenders early on in the process – look at the terms, rates, discount points, and closing costs. This will help you determine who has the best loan for you and who has experience handling VA loans and serving the military community. And don’t be afraid to ask your lender if certain fees can be waived due to your veteran status or other factors.”

3. Get a Realtor and go house hunting.

Find a military-friendly Realtor to assist you in your search for the perfect home. While a military-friendly or veteran-friendly Realtor may not necessarily put dollars in your pocket, they should be familiar with the nuances of using VA loans, saving time and headaches along the way.

4. Sign your purchase agreement.

Your purchase agreement should include a VA Option Clause to protect your earnest money and an additional clause that allows you to get out of the contract if you’re not approved for VA financing on the home of your choice. At this time, the lender will process your loan application and get a VA appraisal of the home.

5. Close on your loan.

After your appraisal and approval, you should be prepared to close (and possibly pay closing costs) and get proof of your new homeowners insurance policy. After your contract is signed, you’re officially a new homeowner – congratulations!

Other Options for Savings

The VA loan program is a fantastic way to save on your home-buying experience. In addition to the well-known benefits of a VA loan, veterans have other opportunities to save on housing costs.

Options for Native Americans

If you’re Native American and have served in the U.S. military, you may be entitled to a unique government-backed benefit called a Native American Direct Loan (NADL). A NADL provides eligible Native American veterans to use the VA loan on Federal Trust Land.

The law requires that the tribal government signs a memorandum of understanding (MOU) with the VA to indicate how the VA loan program will operate on Federal Trust Land. You can easily check if your tribe has a MOU to determine your eligibility.

Options for Disabled Veterans

Additional financial assistance is available to veterans with disabilities.

Specially Adapted Housing Grant (SAH)

SAH grants can help you find a home or fund changes to a home that can accommodate a disability. If you have a service-related disability, this extra funding can be critical in creating an independent living environment.

Special Housing Adaptation Grant (SHA)

Similar to SAH grants, a SHA grant can help with housing costs related to accessibility. Veterans with service-related disabilities can use SHA grant funds to alter an existing residence, update a new home or help you purchase an already-adapted home.

Army E-3 Veteran Clay Hudson is a mortgage loan originator with Planet Home Lending, who vouches for the VA loan’s success when it comes to upgrading your home: “You can buy a home that needs a little TLC with 100% financing and zero down and get $35,000 to make upgrades. It lets you create your dream home all in one loan. The program is also great for veterans with disabilities who need to adapt their homes.”

“The [VA loan] program is also great for veterans with disabilities who need to adapt their homes.”

Army E-3 Veteran Clay Hudson
Mortgage Loan Originator with Planet Home Lending

Be Aware of Home-Buying Fees

As a veteran using the VA loan for your home purchase, you are exempt from certain fees that may be added to the total cost of buying a property.

Be aware of these non-allowable VA loan fees:

  • Attorney fees
  • Brokerage fees
  • Prepayment penalties
  • HUD/FHA inspection fees for builders

Your lender’s fee should cover a variety of fees and expenses with the VA loan. Major fees and expenses include:

  • Lender appraisals
  • Lender inspections
  • Closing or settlement fees (VA closing costs are limited)
  • Application and processing fees
  • Document preparation
  • Escrow fees

The allowable VA loan expenses you may be obligated to pay include:

  • Appraisal and compliance inspections
  • Recording fees
  • Credit report charges
  • Hazard insurance (such as flood insurance)
  • Flood zone determination (if not made by the lender or VA appraiser)
  • Survey fees
  • Title examination and title insurance
  • Mailing fees (for refinancing)
  • MERS fee
  • VA funding fee

What is the VA Funding Fee?

The VA funding fee exists to help pay for existing VA loans that default. This is so U.S. taxpayer dollars aren’t spent on backing those loans. In a way, you’re supporting other veterans and the VA program by paying the VA funding fee – which can easily be added to your total amount borrowed. You can also negotiate that the seller pay this fee during closing or simply pay it in cash up front.

Although there are certain circumstances where the fee can be waived, it is normally between 1.25% to 2.4% for first-time use of the VA loan. Refinancing with a VA loan is a similar percentage – at 2.15% or 2.4% based on if you’re in the regular military or in the Reserves or National Guard. Funding fees are set at these rates by law through Sept. 30, 2028.

“Don’t be shy to ask if a service provider offers a military discount because most do. The same goes with asking for seller concessions.”

Army Staff Sgt. Daniel Bautista
Personal Finance Specialist at Money Done Right

Save More on Home Services

In addition to the military-specific home loans and grants, you can find savings on your home services too. Be sure to take advantage of military discounts and exclusive options for home insurance, like USAA.

According to Army Staff Sgt. Daniel Bautista, who works as a personal finance specialist at Money Done Right, getting discounts and savings is just a matter of asking: “Don’t be shy to ask if a service provider offers a military discount because most do. The same goes with asking for seller concessions.”

Bautista also had success in comparing rates with USAA: “I called at least 15 different companies and asked if they can beat the competitors’ rates … I have USAA and they are a little pricey when you have one product. If you have multiple products with them, you get a substantial discount.” Although we strongly recommend a thorough analysis of all your homeowners insurance options when it comes to home insurance, we are continually impressed with USAA’s perfect customer service ratings from J.D. Power and Consumer Reports. After some significant research within the industry, we officially rated USAA our top pick for military members, veterans, and their families.

You may find savings with military discounts for a home warranty and can even try to negotiate that expense as a seller obligation to pay if you decide you need a home warranty. You can also compound your savings on home insurance when you install a home security system that offers a discount for adding that protection. Check out our 10 top picks for home security and be sure to ask about specific military discounts as you get quotes for service.

Save After You Move

Continue saving on housing costs once you move in by finding military or veteran discounts for furniture, home decor, and home improvement projects.