Introduction
Welcome to our guide on VA loan monthly payments! If you’re a veteran, active-duty service member, or eligible surviving spouse, you may be interested in taking advantage of VA loans to buy, refinance, or improve your home. VA loans offer several benefits, such as no down payment, no private mortgage insurance, and competitive interest rates. However, like any other loan, VA loans come with monthly payments that you need to budget for. In this article, we’ll explain what VA loan monthly payments are, how they are calculated, and what factors can affect them. We’ll also answer some frequently asked questions about VA loan monthly payments.
What is a VA loan monthly payment?
A VA loan monthly payment is the amount you pay every month to your VA lender to repay your VA loan. Your monthly payment will consist of principal, interest, and other fees, such as escrow for property taxes and insurance. The amount of your monthly payment will depend on several factors, such as the amount of your loan, the interest rate, the term of your loan, and the amount of your escrow account.
It’s important to budget for your VA loan monthly payment, as failing to make your payments on time can have serious consequences, such as foreclosure. You should also keep in mind that your monthly payment may change during the life of your loan due to changes in interest rates or escrow payments.
How is a VA loan monthly payment calculated?
Your VA loan monthly payment is calculated based on several factors:
Factor |
Description |
|---|---|
Loan amount |
The amount of money you borrowed to buy or refinance your home |
Interest rate |
The percentage rate at which you borrowed the money |
Loan term |
The length of time you have to repay the loan |
Escrow account |
The account used to pay property taxes and insurance |
Your VA lender will use a loan payment calculator to determine your monthly payment based on these factors. You can use a VA loan calculator to estimate your monthly payment before you apply for a loan.
What factors can affect a VA loan monthly payment?
Several factors can affect your VA loan monthly payment:
- The amount of your loan: The more you borrow, the higher your monthly payment will be.
- The interest rate: The higher your interest rate, the higher your monthly payment will be.
- The loan term: The longer your loan term, the lower your monthly payment will be, but you’ll pay more in interest over the life of the loan.
- The escrow account: If your property taxes or insurance premiums increase, your monthly payment may increase as well.
You can control some of these factors by shopping around for the best interest rate, choosing a shorter loan term, putting down a larger down payment, or paying your property taxes and insurance directly instead of through an escrow account. However, some factors, such as changes in interest rates or property taxes, are beyond your control.
FAQs
What is the average VA loan monthly payment?
The average VA loan monthly payment varies depending on several factors, such as the amount of the loan, the interest rate, the loan term, and the escrow account. However, according to VA data, the median monthly payment for a VA purchase loan in 2020 was $1,560, and the median monthly payment for a VA refinance loan was $1,745.
Do VA loans have a prepayment penalty?
No, VA loans do not have a prepayment penalty. You can pay off your VA loan early without incurring any fees or penalties.
Can I change my VA loan monthly payment?
Yes, you can change your VA loan monthly payment by refinancing your loan or modifying it. Refinancing means replacing your current VA loan with a new loan that has different terms, such as a lower interest rate or a different loan term. Modifying your loan means changing your current loan terms, such as your interest rate or loan term, without refinancing. However, both options may involve closing costs and other fees.
Can I skip a VA loan monthly payment?
No, you cannot skip a VA loan monthly payment without incurring late fees and other penalties. If you’re facing financial hardship and cannot make your payments, you should contact your VA lender as soon as possible to discuss your options, such as forbearance or loan modification.
What happens if I miss a VA loan monthly payment?
If you miss a VA loan monthly payment, you may incur late fees and other penalties. If you continue to miss payments, your loan may become delinquent and eventually go into default. If your loan goes into default, your lender may initiate foreclosure proceedings to seize your property and sell it to recover the unpaid balance of the loan.
Can I pay extra on my VA loan monthly payment?
Yes, you can pay extra on your VA loan monthly payment to pay off your loan faster or reduce your interest charges. However, you should check with your VA lender to make sure that there are no prepayment penalties or other restrictions on paying extra.
Can I refinance my VA loan to get a lower monthly payment?
Yes, you can refinance your VA loan to get a lower monthly payment, especially if interest rates have dropped since you took out your original loan. However, refinancing may involve closing costs and other fees, so you should calculate your savings versus your costs before deciding to refinance.
Can I use a VA loan to buy a vacation home?
No, you cannot use a VA loan to buy a vacation home or investment property. VA loans are only available for primary residences that you plan to live in for most of the year.
Can I use a VA loan to buy a multi-unit property?
Yes, you can use a VA loan to buy a multi-unit property, such as a duplex or a four-plex, as long as you plan to live in one of the units as your primary residence. You can rent out the other units to help pay your mortgage.
What happens to my VA loan monthly payment if interest rates increase?
If interest rates increase, your VA loan monthly payment may increase as well, especially if you have an adjustable-rate mortgage (ARM). An ARM has an interest rate that can change over time, usually after an initial fixed period. If your interest rate increases, your monthly payment will increase too.
What happens to my VA loan monthly payment if property taxes increase?
If property taxes increase, your VA loan monthly payment may increase as well, as long as you have an escrow account to pay your property taxes. Your VA lender will adjust your monthly payment to reflect the higher taxes.
What happens to my VA loan monthly payment if I get a homeowners insurance claim?
If you get a homeowners insurance claim, your VA loan monthly payment may increase if you have an escrow account to pay your insurance premiums. Your VA lender may use the insurance claim money to pay for repairs or damages, but if the repairs or damages exceed the amount of your insurance coverage, you may have to pay the difference out of pocket.
Can I pay my VA loan monthly payment with a credit card?
No, you cannot pay your VA loan monthly payment with a credit card, as VA lenders do not accept credit card payments. You can pay your monthly payment with a check, a money order, an online transfer, or an automatic deduction from your bank account.
Can I have my VA loan monthly payment automatically deducted from my bank account?
Yes, you can have your VA loan monthly payment automatically deducted from your bank account through an electronic funds transfer (EFT) or an automatic clearing house (ACH) payment. Automatic payments can help you avoid late fees and other penalties.
What should I do if I can’t afford my VA loan monthly payment?
If you can’t afford your VA loan monthly payment, you should contact your VA lender as soon as possible to discuss your options, such as forbearance, loan modification, or refinancing. You may also want to seek advice from a financial counselor or a veterans service organization.
Conclusion
We hope this guide has helped you understand VA loan monthly payments and their importance. Remember that your VA loan monthly payment is an essential part of your homebuying or refinancing journey, and you should budget for it accordingly. Keep in mind the factors that can affect your monthly payment, such as the amount of your loan, the interest rate, the loan term, and the escrow account, and explore your options for changing your payment if necessary. If you have any further questions about VA loan monthly payments, contact your VA lender or visit the VA website.
Thank you for your service, and good luck with your VA loan!
Closing/Disclaimer
The information provided in this article is for educational purposes only and should not be construed as financial or legal advice. Contact your VA lender, financial advisor, or attorney for personalized advice regarding your VA loan and its monthly payment. We do not guarantee the accuracy, completeness, or timeliness of the information in this article. Use this information at your own risk.