Massachusetts VA Loans
If you are a veteran living in Massachusetts and you dream of owning your own home, a VA loan may be able to help you successfully achieve that dream. VA loans were created in 1944 by the United States Department of Veterans Affairs (VA) to empower military servicemembers, veterans, and certain eligible spouses on their journey to become homeowners. They offer many benefits including no down payment, lower interest rates, and better terms than Conventional loans.
How Do VA Loans Work in Massachusetts?
VA loans are not issued by the VA, but are guaranteed by them. This means that a private lender, like New American Funding, issues the loan to a qualified borrower, then the VA backs the loan. Since the loan is insured by the federal government, there is no mortgage insurance, like private mortgage insurance, required.
Government-backed loans have their own unique requirements and benefits. Since they’re insured, they give lenders the opportunity to offer terms and conditions that are, in some ways, more flexible than other loan types. For instance, VA loans don’t have a set required minimum credit score or income amount.
Massachusetts Veteran Benefits
Since VA loans are guaranteed by the government, they have specific benefits. These benefits include:
- No down payment: For many servicemembers, this is the most attractive feature of a VA loan. A down payment often ranges from 3%-20% of the purchase price and is usually required to buy a home. Saving for a down payment is one of the most significant concerns for many homebuyers since it is often a large lump sum that must be paid up front when buying a home. VA loans are one of the only home loans that do not require a down payment.
- Lower interest rates: VA loans typically offer interest rates well below those of Conventional loans. Interest rates change often and are influenced by a number of economic factors as well as a few individual ones pertaining to each borrower themselves. They fluctuate with the housing market and are affected by location, changes in government laws, and your credit score.
- No monthly mortgage insurance payments: Because VA loans are guaranteed by the government, they do not require any type of mortgage insurance (MI). MI is designed to protect lenders in the event that the borrower defaults on their loan. How much a borrower pays in MI depends on several factors including the down payment amount and the borrower’s credit score. If a borrower defaults on a VA loan, then VA will pay the lender, so no MI is needed.
- No prepayment penalty: Paying off your loan early or refinancing can have certain benefits, but it may also cost you money if the loan has a prepayment penalty. With a VA loan, you can sell or refinance at any time without having to pay a penalty. The exception to this is a VA Cash-Out Refinance, which has its own requirements, including that the borrower must have six months of payments on their existing mortgage prior to refinancing.
- Reduced funding fees: VA loans have funding fees which help offset the cost of the loan since they don’t have any mortgage insurance. Borrowers may qualify for a reduced VA funding fee on a purchase mortgage or be exempt from VA funding fees if they receive service-connected disability compensation.
- Ability to finance the VA funding fee: Financing the funding fee allows you to combine it with the rest of your mortgage, giving you the opportunity to pay it off over time.
- Less-than-perfect credit usually accepted: Various loan types have different credit score requirements. You don't need to have perfect credit to qualify for a VA loan.
- VA assistance to borrowers experiencing certain financial difficulties
- Benefits are life-long: The VA entitlement that allows borrowers to put no money down and determines the amount of the loan guarantee, is a life-long, reusable benefit.
Massachusetts VA Loan Requirements
VA loan requirements in Massachusetts are the same as other states. There are eligibility requirements that are related to the time you’ve served and other, more general requirements such as fees and residential requirements.
According to the VA, loan eligibility typically requires one of the following:
- 90 days of service during wartime
- 181 continuous days of active service during peacetime
- 6 or more years of service in the National Guard or Reserves
- Being the un-remarried, surviving spouse of a servicemember who died in the line of duty, or as a result of a service-related disability
In addition to eligibility requirements, VA loans also require:
- Payment of a Funding Fee. The funding fee is a one-time payment that helps cover the cost of the loan. This fee can vary depending on the amount of the down payment and military category. How much you will pay depends on the loan type and amount. There are certain circumstances where you may be exempt, so make sure to check with your Loan Officer.
- Borrowers are usually required to move into their new home no more than 60 days after it is purchased. Some exceptions can be made in certain circumstances.
- VA loans must be used for a primary residence. They cannot be used for investment homes or second homes.
According to the VA, there are two Massachusetts-specific property requirements. They are:
- “Every property with an individual sewage disposal system requires evidence from the local health authority (or other source authorized by the VA) that the system meets the Massachusetts Department of Environmental Protection standards.”
- Shared maintenance agreements are no longer needed for shared private roads or driveways.
Each lender has their own set of requirements for loan qualification. Speak with your New American Funding Loan Officer and they will answer any questions you may have.
Massachusetts VA Loan Limits
VA loans have their own set of loan limits. These limits vary from county to county and change every year based on fluctuations in the housing market. They are also dependent on the local housing market. This means that the limits will be lower in low-cost counties and higher in high-cost ones.
Half of the counties in Massachusetts adhere to the standard VA loan limit of $726,200 for a single-family home. The rest have higher loan limits since prices are higher. The top five counties with the highest loan limits are:
Dukes County: $1,089,300
Nantucket County: $1,089,300
Essex County: $828,000
Middlesex County: $828,000
Norfolk County: $828,000
It is important to note that loan limits do not indicate how much money a borrower can qualify for on a loan. They are used by the VA to determine how homebuyers can utilize the no down payment benefit of their VA loan. When a borrower still has full entitlement, they are allowed to borrow as much as their lender will lend to them, while still not being required to pay a down payment.
However, once a borrower has used some of their entitlement, their remaining entitlement and the county’s loan limit are both used to decide how much they will pay in a down payment as well as how much of their loan the VA will guarantee.
VA Loan Entitlement in Massachusetts
VA loans have something called entitlement. Entitlement is the amount of money that the VA will guarantee to the lender if the borrower defaults on their loan. This is what we are referring to when we say that the loan is backed by the government. If the borrower defaults, the government will pay back the lender on their behalf.
VA loan entitlement has two basic forms. Full entitlement and remaining entitlement. The amount of entitlement you have affects your down payment and how much the VA will guarantee on your loan.
Full entitlement: When you have full entitlement you do not have to pay a down payment and the VA will guarantee up to 25% of the loan amount. This guarantee is one of the main things that makes VA loans so beneficial to borrowers. This government backing makes them a less risky option for lenders. That gives them space to be more flexible with the terms and conditions of the loan agreement.
According to the VA, you have full entitlement if you:
- Have never used your VA home loan benefit to purchase a house
- Have used your VA home loan before, but you have paid it off in full and also sold the property
- Have used your benefit, but the property has been foreclosed on or you’ve had a short sale (meaning you sold the house for less than you currently owed on the mortgage) and repaid the loan in full
Remaining entitlement: When you have remaining entitlement it means that you’ve already used a portion of your entitlement on a loan. Remaining entitlement is affected by VA loan limits.
While the VA guarantees 25% of the total loan amount with full entitlement, remaining entitlement is different. If you are using remaining entitlement, the VA will guarantee 25% of the county loan limit minus whatever amount of your entitlement has already been used. You may also have to pay a down payment.
According to the VA, you have remaining entitlement if:
- Your VA loan is currently active and you are still in the process of repaying it
- You’ve repaid your VA loan entirely, but you still own the house
- You still own the house and have refinanced your VA loan into a non-VA loan
- You sold your house for less than you currently owed on the mortgage and you have not repaid your VA loan in full
- The home that was purchased with a VA loan was foreclosed on and you have not repaid the loan in full
The amount of entitlement that you have does not dictate how much you will be able to borrow for a loan. That is up to your lender. How much you can borrow will depend on factors like your credit score, how much income you have, and where you are trying to buy.
Your entitlement is a lifelong benefit from the VA and can be used and reused multiple times if certain conditions are met. It is also a spousal benefit that may be available to eligible spouses of veterans or servicemembers. Having VA entitlement does not guarantee a borrower loan approval. Ask your Loan Officer about lender-specific qualifications.
VA Loan Rates in Massachusetts
Mortgage rates fluctuate daily and are dependent on numerous factors. These can include economic factors such as changes in law and policy, shifts in global trade, and the housing market on the global, national, and local level. Your mortgage rate will also depend on individual factors like your credit score and the term of your loan.
VA loans do tend to offer more favorable interest rates than many other loan types since they are backed by the government.
Types of VA Mortgage Programs in Massachusetts
VA Purchase Loan:
VA Purchase loans with a fixed rate are great for borrowers looking for a consistent payment for the life of the loan.
They’re also available as an Adjustable-Rate mortgage, which can be ideal for military borrowers looking to take advantage of the upfront savings offered in an ARM loan. For example, borrowers who expect to receive PCS orders within 5 years may consider a 5/1 VA ARM. These loans can be used to:
- Buy or build a home
- Make your home more energy efficient
VA Cash-Out Refinance Loan:
- Refinance up to 100% of the value of your house for loans that meet the Conforming loan limit
- Refinance a non-VA loan
- Use the cash can be used for many things including paying off debt, paying for tuition, or buying an investment property
- Access the wealth that is tied up in your home as cash
VA Streamline Refinance Loan:
VA mortgage holders may refinance with the VA Interest Rate Reduction Refinance Loan (IRRRL), also known as the VA Streamline Refinance. These loans can offer:
- Cash benefits for a borrower who already holds a VA loan
- A more simplified refinance process
- Access to a lower rate and monthly mortgage payment
- No need to submit bank statements, W2s, paychecks and other documents
- A more stable monthly mortgage payment
Refinancing your loan can offer you many benefits. You can use our refinance calculator to check and see what refinancing might be able to do for you.
How Can You Get a VA Loan in Massachusetts?
To apply for a VA loan in Massachusetts, contact New American Funding. Your Loan Officer will be happy to answer your questions and guide you through the process. There are several common steps required for getting a VA loan. They include:
- Apply for a Certificate of Eligibility (COE). You can request a COE from the VA. This certificate is the document that verifies your eligibility status for a VA loan. Your Loan Officer will help you gather the necessary forms. The information you will need will include information about your personal identity as well as details of your military service.
- Work with your Loan Officer to ensure you qualify and find the right home loan for your specific needs. There are several different types of VA loans. Your Loan Officer will help you choose which one is right for you.
- Your lender will refer you to a Real Estate Agent in their preferred network to find and negotiate a purchase agreement for your new home.
- Your Loan Officer will take care of the home appraisal process for you, ordering a property appraisal from a VA-assigned appraiser.
- If your lender is authorized by the VA to approve and close your loan, you won't have to wait for separate VA approval of your credit application.
- Loan closing. You are now a homeowner.
Massachusetts VA Loan FAQs
What is the VA Loan Limit in Massachusetts?
The VA loan limit for half the counties in Massachusetts is $726,200 for a single-family home.
The top five counties with the highest loan limits are:
Dukes County: $1,089,300
Nantucket County: $1,089,300
Essex County: $828,000
Middlesex County: $828,000
Norfolk County: $828,000
How are Massachusetts VA Loan Payments Determined?
Your loan payments are determined by a number of factors. These include things like your mortgage amount, which type of loan you qualify for, and extra costs like property taxes and homeowners insurance. Your loan payment will also be determined by your interest rate and the loan term.
For instance, if you have a 30-year loan term, your payments will be smaller than if you have a 15-year loan term. Similarly, if your interest rate is higher, your payments will be larger.
You can use our Massachusetts mortgage calculator to get an estimate of what your monthly loan payments could be. It’s designed to let you explore the different factors that will affect your payment and see how it might be changed by loan term, type, or your credit score.
Do I Need Private Mortgage Insurance (PMI) With a Massachusetts VA Loan?
VA loans are guaranteed by the U.S. government. This means that the government insures them against default, so PMI is not needed.
Is Massachusetts a Veteran Friendly State?
Massachusetts has many benefits, specifically for veterans. They have housing benefits, financial assistance programs, and employment assistance.
Each program has its own qualifications for eligibility. You can contact the Massachusetts Department of Veterans and Military Affairs for guidance on what benefits might be available to you.
Do Veterans Have to Pay a Funding Fee in Massachusetts?
Most veterans will have to pay the VA funding fee in Massachusetts. However, there are exceptions, so make sure to check with your Loan Officer to find out your options.
Does Massachusetts Offer VA Loans to Surviving Spouses?
Yes. VA loans are available for surviving spouses who meet certain qualifications.
Is it Hard to Get Approved for a VA Loan in Massachusetts?
VA loans are among some of the simplest loans to qualify for, if you are an eligible veteran or spouse. Since these loans were designed specifically for servicemembers, their eligibility is exclusive to the U.S. military and certain related organizations. However, if you are eligible, they can be easier to qualify for than other home loans since they have more lenient credit requirements and no down payment requirement.