Fort Smith area homebuilders learn more about VA loans

With more military veterans buying homes in the Fort Smith area, builders, remodelers and real estate agents need to know more about Veteran Administration (VA) loans and how they can make the process more affordable for veterans and their families.

“Our veterans are very important to us. … They are educated. They are not like the veteran buyer 5, 10, 20 years ago,” said Rose Catalano, manager of the Fort Smith branch of SWBC Mortgage and certified veterans lending specialist. “When they come into your picture, they know more than you know about their VA benefits.”

And that means the builder or remodeler nees to know more about the buyer and how VA loans work, Catalano told a group of local homebuilders during a recent lunch and learn session presented by the Greater Fort Smith Association of Homebuilders.

“Our goal is to help builders understand the VA Loan process so they can better serve those who have served our country,” said DeAnne Hankins, Executive Director of the Home Builders Association of Fort Smith. “Veterans have dedicated their lives to protecting our freedoms, and we want to support them in achieving the American dream of home ownership.”

Catalano worked during the session to dispel many of the myths regarding VA loans – specifically they take longer to get approved, they are more complicated and that they require more fees. There is no maximum amount for a VA home loan, though the lending cap is typically $2 million for most buyers. Down payment options are as low as 0%, and no private mortgage insurance is required, Catalano said.

The loans come with competitively low interest rates and in 2023, the US Department of Veteran Affairs reduced the funding fee for certain VA home loans.

“The VA home loan is often one of the best choices on the market,” Catalano said.

She gave the example of a customer with a 720 credit score purchasing a $380,000 home with a max of 5% down payment. Closing costs are the same for a conventional loan or a VA loan, but under the VA loan, the principal and interest payment would be lower. The conventional loan with a 6.625% interest rate would have a monthly payment of $2,520. Under the VA loan, the monthly payment would b e$2,289.33 – a $230.67 savings each month.

The difference could allow the buyer to qualify for funding and be able to buy a more costly home, Catalano said.

Of course, there are some guidelines. The veteran must occupy the home purchased with a VA loan as a primary residence. Occupancy by the spouse satisfies the requirement for those on active duty. Single, unmarried, active duty service members who are deployed may satisfy occupancy requirements.

“We have a lot of buyers in the military looking to buy a duplex, triplex, quadplex. They want to  live in one unit and rent out the others to make their mortgage payments. They are savvy. And we are all for this. We just need more of those being built,” Catalano said.

The VA also offers renovation home loans that allow the buyer to combine the purchase price of the home and the total cost to renovate it in one mortgage.

“They will not allow the buyer to do the renovations themselves,” Catalano said.

Buyers benefit from the loans because they get to decide what they want done to their new house and get to choose the contractor they want to do the work, she said. Sellers benefit because they don’t have to spend money on a house they are selling. And agents benefit because they do not have to worry about closing delays that may occur due to repairs that may be required by the property inspector or appraiser, she said.

All that a homebuyer needs to obtain VA financing is proof of honorable discharge or of in good standing if they are active duty.