Tips & Special Topics
Understanding VA Home Loans
Added October 11, 2007 | Updated January 22, 2008
The United State Department of Veterans Affairs offers many benefits to the Veterans of our Armed Services. One of the best benefits is the VA Guaranteed Home Loan. VA Loans are not provided by the government; they are made by private lenders such as banks and mortgage companies. VA Home Loans are made to eligible veterans for the purchase of a home that will be occupied as the veteran's primary residence. The VA guaranty protects the lender against loss in the event the owner is unable to pay back the VA mortgage loan.
A VA loan offers a number of options including buying a house, townhouse or condominium. You may even use your VA guaranteed home loan to construct a house. With a VA home loan refinance, you can refinance your mortgage to a lower rate and/or receive cash out, consolidate debt or make approved home improvements.
To qualify for VA home loans, you will need to meet criteria set by Veterans Affairs. One of the first steps is to obtain a Certificate of Eligibility. You may request a Certificate of Eligibility on your own, or in most cases your lender can get your certificate through the ACE (automated certificate eligibility) system. Generally you must have received an honorable discharge or be an active duty service personnel to be eligible for a VA mortgage loan. Other eligibility criteria include, but are not limited to:
- Active duty veterans discharged during or after WWII, Korean, or Vietnam must have at least 90 days on active duty.
- Peacetime veterans or active personnel must have at least 181 days of continuous active duty.
- Enlisted Service after 1980 and Officer Service after 1981 must have completed at least 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty.
There is a formula to determine the maximum loan amount available to you for VA Home Loans. Your lender, whether it is a bank or mortgage company, will help you determine the amount that applies to you. VA Lenders will typically loan to qualified Veterans a no-down-payment home loan of up to $417,000.
If you qualify for a VA home loan there are a number of benefits that may make this preferable to a standard loan. These include:
- No down payment (unless required by the lender)
- VA mortgage loans often offer lower interest rates than conventional loans
- Veteran Loans do not have mortgage insurance premiums
- Closing costs are comparable and may be lower than other loans
- Assumable mortgage
- VA home loan program is reusable for purchases and refinances
- No penalty for pre-payment
- You may qualify for a VA Loan when you cannot qualify for other mortgage loans
- VA assistance for veterans in default because of temporary financial difficulty
With all the benefits provided by guaranteed VA Home Loans, qualified veterans should consider the opportunity to take advantage of this great program offered by the
Department of Veteran Affairs and VA mortgage lenders.
