A VA loan is a loan made by private lenders, like us, to eligible veterans. If you want to purchase a home, condominium or manufactured home, the VA can guarantee up to $417,000 of the total loan — much higher than you can get with most conventional home loans.
There are three types of VA loans: purchase loans, interest rate reduction refinance loans (or IRRRL, also referred to as a VA streamline refinance loan), and cash-out refinance loans. There are many benefits to a VA loan, but one of biggest benefits is that no down payment is needed to purchase a home. This can make home ownership a reality for active military or veterans who might otherwise not be able to afford it.
Who Is Eligible for VA Loans?
VA loans are designed for military personnel, veterans, and military families. The list of those who are eligible for this home-buying military benefit include:
- Veterans
- Active-duty personnel
- Reserve members
- National Guard members
- Some surviving spouses
You must also have suitable credit, sufficient income, and a valid Certificate of Eligibility (COE). And you must use the home for your own personal occupancy. Still unsure if you’re eligible? Check the Department of Veterans Affairs website for a detailed list of eligibility requirements for military service members, veterans, and military spouses.
VA Loan Features and Benefits
- No down payment required (unless required by the lender or the purchase price is more than the VA loan limits)
- Negotiable and competitive interest rate.
- Ability to finance the VA funding fee (plus reduced funding fees with a down payment of at least 5 percent and exemption for veterans receiving VA compensation).
- VA rules limit the amount you can be charged for closing costs.
- Closing costs are comparable with other financing types (and may be lower).
- Closing costs may be paid by the seller.
- No private mortgage insurance premiums are required.
- An assumable mortgage.
- Right to prepay your mortgage without penalty.
- For homes inspected by VA during construction, a warranty from builder and assistance from VA to obtain cooperation of builder.
- VA assistance to veteran borrowers in default due to temporary financial difficulty.
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