VA

The purpose of a VA loan is to offer eligible military veterans the option to purchase a home with fewer restrictions than a traditional loan. These loans allow the military personnel and veterans to buy, build, or repair a home for primary occupancy. VA loans are backed by the US Department of Veteran Affairs, which gives the lender security against default. With this security, the private mortgage lenders can offer more favorable terms on the loan such as a lower interest rate, smaller down payment, minimal closing costs, and flexible refinancing options.

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Who Qualifies for a VA Loan?

VA loans are available to military veterans and their surviving spouses, specifically:

  • Active duty military personnel
  • Active members of the National Guard and reservists (who have served at least six years)
  • Military veterans
  • Spouses of those killed or disabled while in active duty

In order to apply for a VA loan, you must produce a Certificate of Eligibility (COE) and meet the requirements for the specific loan you are applying for. This will show the lender that you are approved for a VA loan. The COE can be found on the Department of Veteran Affairs website. [MORTGAGE COMPANY NAME] can also help you obtain this form.

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Benefits of a VA loan

The VA loan is one of the most affordable loans on the market. To start, there is zero down payment required with a VA loan. This means a buyer can move into a new home without a significant upfront investment. In addition, there is no monthly mortgage insurance payment (MIP) required. With standard FHA loans, when the buyer puts down less than 20% for the home, an additional monthly MIP is required. This can be an additional of over $100 a month to the loan payment. Finding a loan that doesn’t require MIP is a huge benefit. Closing costs are minimal as well, and oftentimes are limited to the small VA funding fee.

The VA insures a portion of each loan, which means that lenders are comfortable offering lower interest rates and are more forgiving when it comes to credit scores. Interest rates on a VA can be up to one percent lower than the national average for a traditional loan. While a traditional lender will aim for a buyer with a credit score of 620 or higher, the VA loan allows for more leniency on credit and even bankruptcy.

Refinancing a VA loan comes with a lot of flexibility as well. Streamlined financing is available for this type of loan. This allows the homeowner to refinance at a lower interest rate. If the homeowner has built up equity in the loan, there is also an option to receive cash back at closing.