What is a VA Loan?
If you are, or have been, a member of the U.S. military service, then you should look into getting a Veterans Affairs (VA) loan. These loans are available to current and former members of the Army, Navy, Air Force, Marine Corps, Coast Guard, Reserves, or National Guard. VA loans are also available to spouses of these members.
A VA loan is a mortgage that's guaranteed by the U.S. Department of Veterans Affairs. It lowers the risk for lenders providing funds to members of the military. Basically, the government guarantees that if the borrower doesn't pay off the loan, then they (the U.S. Government) will pay it.
While lenders get the benefit of security on the loan, VA loan borrowers reap a few benefits as well. VA loans often require zero down payment or private mortgage insurance (PMI). These benefits are there to help ensure that veterans and their families have access to affordable housing.
The VA loan program also offers specialized loans under its umbrella. For Native American veterans, the Native American Direct Loan (NADL) program offers many of the same benefits for homes located on federal trust land.
Veterans who have specific permanent and total service-connected disabilities have access to two housing grants provided by the VA:
- The Specially Adapted Housing (SAH) grant can be used to build or remodel a specially adapted home.
- The Special Housing Adaptation (SHA) grant can be used to adapt a preexisting property, or it can go toward buying an existing adapted property.
VA Loan Refinancing Options
VA home loans also come with outstanding refinancing solutions! For veteran homeowners who want to refinance their VA-secured mortgages, there are adapted refinancing options to choose from. These refinancing packages are specifically meant for VA-guaranteed mortgages, with benefits that can't be found for other home loan refinancing packages.
VA Streamline Refinancing
Also known as the Interest Rate Reduction Refinance Loan (IRRRL), the VA streamline refinancing solution is designed to reduce the interest rate and monthly payment on a VA loan. Benefits include no required credit or appraisal underwriting, and often no out-of-pocket expenses!
VA Cash-out Refinancing
Convert home equity into cash with the VA-secured cash-out refinancing option. It keeps the benefits attached to standard VA loans, and allows non-VA loans to be refinanced into VA loans!
Qualifying for a VA Loan
VA loans are available to military personnel who are currently serving and to those who have retired. Your eligibility for a VA loan depends on the length and character of your service. In general, the following criteria qualifies you:
Active personnel who have actively served for at least 90 days during wartime
Personnel who have served actively for at least 180 days during peacetime
Personnel who have 6 years of service in the National Guard or Reserves
A spouse whose partner died in active service or from an injury acquired during service
If you're a military member who doesn’t fit the descriptions above, don't be discouraged! You may still qualify. The VA loan program has an extensive list of beneficiaries with varying qualifications. If you'd like to know if your service or your spouse’s service (even a former spouse) qualifies you for a VA loan, then fill out the form below and a home.loans specialist will assist you.
VA Loan Terms
VA loans are meant to benefit our service members, so their terms are some of the best on the market. Benefits include:
No income threshold
No down payment requirement in most cases
Generally, lenders are willing to loan up to $417,000 without a down payment (can be higher in certain counties)
No private mortgage insurance (PMI) payments
Lenders are willing to give lower rates on VA loans because the government guarantee lowers the risk
Closing costs are limited; the seller may even pay them
No prepayment penalties; pay off a loan quickly without incurring costs
VA loans are an assumable mortgage (subject to approval); if you sell the home, the buyer will take up the mortgage with its low rates
VA Department staff will help you avoid foreclosure and find other alternatives if you need them
VA Loan Pros:
No down payment
No PMI required
More flexible debt-to-income ratio allowance
No prepayment penalties
Assistance to prevent foreclosure or bankruptcy
VA Loan Cons:
Each loan is charged with a VA funding fee that must be paid, with exemptions reserved for veterans with disabilities
Can only be used to purchase a primary home
Approval of all required paperwork can be a lengthy process
What can a VA loan be used for?
VA loans are designed to give good homes to those who serve(d) the military. The loans may be used to:
Buy a home
Build a home
Buy and improve a home
Adapt a home for disability access
Refinance an existing mortgage
There's no limit on the amount that you can borrow, but there is a limit on how much of the loan the VA loan program can guarantee. The guarantee amount depends on the county limits.
VA Loan Requirements
The U.S. Department of Veterans Affairs does not issue the loans directly; it guarantees the loans funded by approved private lenders. The department has stipulations that the approved lenders must follow, but for the most part, they decide on their own requirements to get a loan. In general, lenders require that:
You must be an eligible applicant, i.e., a member of the military or their spouse.
The loan must be for eligible purposes, i.e., housing our military members and their families.
You must immediately occupy or intend to occupy the home within a reasonable amount of time after closing the loan.
You must be a good credit risk. There's no set credit score, but lenders usually have it at around 620.
Your income should be able to handle the payments required.
How to apply for a VA loan
Applying for a VA loan with home.loans is relatively simple. We will:
help determine your eligibility for a VA loan;
connect you with approved lenders; and
assist you with a Certificate of Eligibility (COE) to include in your application.