VA Mortgage

VA Mortgage

A VA home loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs (VA). The program is intended to offer long-term financing to eligible American veterans or surviving spouses (provided they do not remarry). The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is typically lower than the market rate.

Here are some key features and benefits of VA home loans:

  1. No Down Payment Required: One of the most significant advantages of a VA loan is that no down payment is typically required, unless the purchase price of the home exceeds the appraised value or the loan limit.
  2. No Private Mortgage Insurance (PMI): Unlike many conventional mortgages that require PMI when the borrower provides less than a 20% down payment, VA loans don’t require PMI, which can save borrowers a significant amount over time.
  3. Limit on Closing Costs: The VA restricts the amount of closing costs that a veteran can pay. Some costs and fees must be paid by the seller, which can be advantageous for the buyer.
  4. No Prepayment Penalty: If you want to pay off your VA loan early, there are no prepayment penalties.
  5. Competitive Interest Rates: Due to the government guarantee, lenders can offer VA loans at competitive interest rates.

Types of VA Loans:

  1. Purchase Loan: Helps veterans purchase a home at a competitive interest rate without needing a down payment or private mortgage insurance.
  2. Interest Rate Reduction Refinance Loan (IRRRL): Also known as the VA Streamline Refinance, this loan helps veterans obtain a lower interest rate by refinancing their existing VA loan.
  3. Cash-Out Refinance Loan: Allows veterans to take cash out of their home equity or refinance a non-VA loan into a VA loan.
  4. Native American Direct Loan (NADL) Program: Helps eligible Native American veterans finance the purchase, construction, or improvement of homes on Federal Trust Land, or reduce the interest rate on a VA loan.
  5. Adapted Housing Grants: These grants help veterans with certain service-connected disabilities to build or modify a home suited to their disability needs.
  6. VA Construction Loan: Though not as common, some lenders offer VA construction loans that allow veterans to finance the construction of a new home.

To be eligible for a VA loan, one typically needs to meet certain service requirements (e.g., a specific number of days in active duty), have a good credit score, sufficient income, and a valid Certificate of Eligibility (COE). However, the specific requirements can vary based on the loan type and other factors.

If you’re considering a VA home loan, it’s crucial to work with a lender who is familiar with the VA process to ensure that you take full advantage of the benefits available to you.

Use our mortgage directory to find local VA Mortgage Brokers in your city.

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