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What is a VA mortgage or VA home loan?
VA mortgages are mortgage loans that have been guaranteed by the Veterans Administration and issued by qualified lenders. VA home loans are designed to offer long-term financing options to American veterans and their surviving spouses. These loans allow veterans 100% financing without private mortgage insurance (PMI). Veterans may borrow up to 100% of the sales price or reasonable value of the home. For VA Streamline refinances, veterans may borrow up to 90% of reasonable value, dependent of state laws. VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously.
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Am I eligible for a VA home loan?
You may be eligible for a Veterans’ home loan if you are a veteran who served on active duty and were discharged under conditions other than dishonorable, during World War II or later periods. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days' service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days' active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years. For a more specifications see our Eligibility Requirements.
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Is a VA loan better than a conventional home loan?
VA Loans have many benefits for qualifying customers over conventional loans. The biggest benefits of these loans are for first time home buyers or customers with little or no money down. However this does not mean there aren't benefits for anyone who is VA qualified. Some of the benefits include no private mortgage insurance. Typically you are required to put 80% down on a conventional loan to avoid paying PMI (private mortgage insurance). The VA is very strict on the fees a lender can charge. This results in very favorable rates and closing fees for borrowers. You also have the right to prepay on your mortgage without any penalty.
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What are the costs of a VA loan?
VA loans are 100% financed without private mortgage insurance or 20% financed for second mortgages. A VA funding fee of 0 to 3.3% of the loan amount is paid to the Veterans’ Administration, which can be financed. VA loans also entail closing costs in addition to the loan itself. In most cases you do not have to pay closing cost out of pocket.
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Can I get a VA loan from my local bank?
Many local banks or other lending institutions are not approved by the VA to lend VA loans. They may discourage you from going the VA route because they do not have the ability to do VA loans.
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More Questions...
If we haven't answered your question, contact one of our VA Specialists at 1 (800) 598-5022, or contact us with your question.