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Each year, thousands of military members and veterans in California use the VA loan program to either purchase or refinance a home.
VA loans in California allow eligible home buyers to finance the entire purchase price without paying mortgage insurance. These features can benefit all home buyers, but they’re especially important in a state like California with higher than average home prices.
Here’s what you need to know about using a VA loan to buy a home in the Golden State.
The U.S. Department of Veterans Affairs (VA) home loan program is available to military members, veterans, and certain qualifying spouses. Because of this, it tends to be widely used in states that have a large military population. And that certainly applies to California.
California is one of the top states for VA loan usage, along with Virginia, Texas, Florida, and Georgia. San Diego County, in particular, records a high number of VA loans each year.
During 2023, nearly 20,000 VA loans were processed in the Golden State. Most of those were for purchases made by home buyers, with mortgage refinance making up a smaller portion.
The state of California is home to a number of major military installations, including:
California military home loans can benefit home buyers and homeowners from these and other installations, not to mention all the veterans who served in the past and currently reside in California.
As mentioned above, you have to be connected to the military in some way to qualify for a VA-guaranteed mortgage loan. This program rewards military members (and certain spouses) for their service, by facilitating the purchase of a home.
Generally speaking, the following groups are eligible for a VA loan in California:
You can learn more about the requirements for VA loan eligibility in California and request your Certificate of Eligibility through the VA.gov website.
The VA home loan program offers veterans and active-duty service members a chance to buy a home with no down payment, a competitive interest rate, and no private mortgage insurance.
Home buyers all across the country can benefit from this combination of features. But they become even more important in an expensive state like California.
If you use a conventional loan to buy a home in California, you’ll probably have to make a down payment of at least 3%, and maybe 5% or higher. The current median home price in California is around $787,000.
If a home buyer chose to put 20% down on a median-priced home (perhaps to avoid paying mortgage insurance), the median down payment would amount to more than $157,000.
So even on the low end, a home buyer in California would need to pay more than $23,000 to cover the down payment on a conventional loan. And a lot of folks would struggle to save that much.
The U.S. Department of Veterans Affairs website does a good job summarizing these important VA home loan benefits in California. Here’s how they explain it on their website:
“You don’t need a down payment. None whatsoever. Most mortgage programs, such as FHA and conventional loans, require at least 3.5 percent to five percent down … With a VA loan, you also avoid steep mortgage insurance fees. At 5 percent down, private mortgage insurance (PMI) costs $150 per month on a $250,000 home, according to PMI provider MGIC.”
Let’s start with the things you don’t need when using a VA loan in California.
You don’t need to make a down payment. This is a major benefit that bears repeating. The program allows you finance 100% of the home purchase price, with no upfront investment.
But you’ll probably have to pay closing costs, and these can add up to thousands of dollars.
On average, California home buyers who use VA loans tend to pay 2% to 5% of the purchase price in closing costs. So you’ll want to start saving up for these costs as soon as possible, so you can clear this hurdle.
The good news is that the VA loan program allows borrowers to use gift money from an approved donor (like a family member) to help cover their closing costs.
You’ll also need to have a manageable level of debt and sufficient income to cover your monthly mortgage payments and all other recurring expenses. But VA loans in California tend to be more flexible in these areas, when compared to conventional mortgage financing.
Most VA borrowers have to pay a funding fee. Depending on the loan parameters, home buyers typically pay a one-time fee ranging from 1.25% to 3.3% of the borrowed amount. You can pay it up front as part of your closing costs, or roll it into the loan and pay it over time.
If you can check all of these boxes, you’re probably well-qualified for the program.
We’ve talked about the benefits of California VA loans and the types of borrowers who might be eligible for the program.
It’s important to fully understand the VA loan process in California for 2024 to ensure a successful transaction.
As a mortgage company that specializes in VA loans in California and serves the entire state, we can help you with many of the steps listed above. This includes everything from the initial COE request to the actual loan funding.
We can also answer any questions you have about using a VA loan in California. The best-case scenario is to enter the mortgage and home buying process with a solid understanding of how it works. Our knowledgeable loan experts can help you accomplish this. Reach out to get a rate quote and get pre-approved for a mortgage to buy a home!
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.