If you’re a Veteran of the U.S. Armed Forces or in active duty, you might be aware of a specialized home loan program administered by the Veteran’s Administration. There are significant benefits to obtaining a mortgage backed by VA support for eligible borrowers, so the plan is worth looking into if you think you qualify. Some general information about VA loans, the advantages and the financing process will be helpful if you’re considering one.
What is a VA loan? It’s a home loan backed by the VA which is available to members of our nation’s military, either active duty or those who have served in the past. The federal government doesn’t actually provide the loan funds, but the Department of Veterans Affairs acts as a sort of co-signer on loans for those individuals who qualify.
Who is eligible? Members of the military, including veterans, active duty, reservists and National Guard may qualify for a VA loan; some surviving spouses are also eligible. There are other requirements based upon the type of purchase the VA loan is to secure. The mortgage must be used to:
- Purchase a primary residence in a VA-approved location;
- Build a new home; or,
- Financing the purchase and renovation of an approved project.
There are also duty standards that must be met, such as number of continuous or total days of active duty. These are based upon the qualifying war conflict or peacetime periods during which applicants served their country.
What are the advantages of a VA loan? Those who qualify for a VA loan enjoy many benefits, including:
- No down payment required;
- A negotiable interest rate;
- No requirement for mortgage insurance;
- VA financial assistance if borrowers default in some situations;
- No penalties for prepayment; and,
- Other advantages depending upon the circumstances.
Even considering these advantages, it’s important to keep in mind that a VA loan isn’t “free” money and funds don’t come from the federal government. The program simply offers some mortgage terms that are better than traditional lenders would offer.
How do I apply for a VA loan? Anyone seeking to apply for a VA loan should start by contacting a lender that’s approved and participates in the VA home loan plan. In order to prove you qualify, you’ll need a Certificate of Eligibility showing that you’ve served the appropriate number of active duty days during the relevant wartime or peacetime period. Many VA approved lenders will assist in obtaining the proper certification and with other paperwork. Once accepted, borrowers can finance up to $417,000 – or more in some geographic regions.
This information should help you determine whether you’re eligible for a VA loan and how you can benefit from applying for one. However, there are more details and specific requirements you’ll have to meet as part of the process. If you have questions about the application process or whether this type of loan is right for you, talk to a mortgage lender with experience in the VA loan program.