The CalVet and VA loan programs are two excellent options that give qualifying veterans the chance to enjoy affordable housing that is safe, comfortable, and reliable. It can be hard to pick between these two top-quality programs, as each has its advantages.
For qualifying veterans, they both offer easy qualification, 0% financing, and many other benefits. Choosing between one or the other can seem tough, but in particular, there are four specific advantages of a VA loan over a CalVet loan.
Both Programs Offer Excellent Financing for Veterans!
We should clarify something first: we are in no way trying to downplay CalVet loans or promote VA loans over the California-only option. The purpose of this article is simply to provide the information you need to make the appropriate choice. Neither is better, and we are proud to offer both loan products to qualifying veterans.
Advantages of a VA Loan over a CalVet
The differences in these two loans are in the details. Here are four reasons why you might choose a VA loan:
1. Available in All States
The main difference is that the VA loan is a nationally-available product that can be utilized in all corners of the country. From Oregon to Maine, Florida to California, and everywhere in between, VA loans provide affordable financing for high-quality homes.
CalVet loans, on the other hand, are only available to veterans who will be purchasing a house in California. You don’t have to have lived in California, but the home you will be purchasing (and living in) needs to be in the Golden State. This obviously eliminates the program for many buyers.
2. VA Loan Can Offer Higher Limits for High-Priced Areas
In our previous article, we discussed the fact that CalVet loans can offer higher loan limits than VA loans. It might seem like we are contradicting this statement, but let us explain.
Across the state, the CalVet can offer higher loan limits, as their bottom-line lending limit (or “base limit”) tends to be higher than the base limit for VA loans. But for counties with high-cost markets, VA loans can offer better prices.
Both of these loan programs have limits to how much they can offer, but it may be possible to utilize a VA loan and take advantage of a higher limit if you are purchasing a home in a more expensive, high-cost county.
Loan limits for the VA are set by the Federal Housing Finance Agency, which sets the standards for conforming loans. As of writing this article, the base loan limit for VA loans is $510,000; this is the limit that applies to houses in Imperial, Riverside, San Bernardino, and Kern County, just to name a few.
But if you are purchasing a home in a high cost county, this loan limit is increased significantly. The limits for other California counties include:
- San Diego: $701,500
- Los Angeles: $765,600
- Orange: $765,600
- Ventura: $713,000
- San Mateo: $765,600
- Santa Barbara: $625,500
So if you live in a higher-priced county, you may be cut short in pricing with a CalVet loan. A VA loan may be the better option.
3. Refinancing Available with a VA Loan
Some homeowners will eventually want to refinance their loans, which can be motivated by a wide variety of reasons. Most of all, however, people want to refinance to take advantage of either lower interest rates or extend their loan period. If you took out a loan, the interest rates could have gone down, but you are still paying the higher rate from your closing. With a VA loan (and many other loan products), you can refinance and take advantage of lower rates, potentially saving thousands over the life of your loan.
You may also refinance to extend the timeframe of your loan, which would result in lower payments. Basically, you pay for a longer period, but the monthly payment is less, enhancing overall cash flow. This can be beneficial if you are currently struggling with payments, have a 15-year loan, and want to stay in your house.
With a CalVet loan, refinancing is possible but it is much more difficult and complex. The Department if Veteran Affairs actually has a specific program, called the Interest Rate Reduction Refinance Loan (IRRRL), that streamlines the process and makes for convenient refinancing. This program is designed to help reduce interest rates on existing VA loans, and could be a useful way forward if rates have declined since you took out your loan.
4. More Flexibility for Occupying Home
No matter which you use, you need to occupy the property. However, with a VA loan the amount of time you are required to live in the property is severely reduced.
Both of these programs are intended to support owner-occupied housing; they are meant to help people purchase a home for themselves and their families. They are not intended for the purchase of an investment property, so certain restrictions are made.
With a VA loan, you must live in the property for about a year to two years, although this restriction can vary. This is meant to keep people from simply using the VA loan program to build an investment portfolio, which is not its intended purpose. However, once the two years (give or take) are complete, you can move out and place the home as a rental.
With a CalVet loan, however, you are required to live in the property throughout the life of your loan. Until the house is completely paid for or the loan is refinanced into another program, you must live on the property.
Find High-Quality Financing for Your Next Purchase
If you feel a VA loan or CalVet loan would be right for your next purchase, contact our helpful team. We’ll show you all the right options, including the pros and cons of both VA and CalVet loans, allowing you to can make a fully informed decision on your next purchase.