If you’re a veteran or active military member, you may be eligible for a VA loan.
VA loans are backed by the U.S. Department of Veterans Affairs, and they offer a number of benefits, including no down payment and no mortgage insurance.
VA loans are available for both purchases and refinancing. If you’re looking to buy a home, you can use a VA loan to buy a single-family home, a condo, or a multi-family home. You can also use a VA loan to build a home. If you’re interested in refinancing, you can use a VA loan to refinance an existing mortgage or to cash out equity from your home.
To qualify for a VA loan, you’ll need a Certificate of Eligibility from the VA. You can get a Certificate of Eligibility online, or you can get one through your lender. Generally, you’re eligible if you fall into one of these three categories:
- You’re an active-duty service member or an honorably discharged veteran who has 90 consecutive days of active service during wartime or 181 days of active service during peacetime.
- You have served more than six years in the National Guard or the Selected Reserve.
- You’re the spouse of a service member who died in the line of duty
You’ll also need to meet the credit and income requirements for a VA loan. If you have any questions about VA loans, contact a loan officer. They’ll be able to help you determine if you’re eligible and walk you through the application process.
VA Loans FAQ
While the VA loan process can be summarized in a few steps, there are numerous aspects of VA mortgages that potential borrowers and agents are unfamiliar with.
- They aren’t issued by the VA. The VA isn’t in the business of originating loans. Instead, the agency backs each qualified mortgage loan with a guaranty.
- However, the government backs them up. The VA usually guarantee 25% of the loan amount if you have a VA entitlement. The guaranty gives lenders peace of mind and aids service members in obtaining favorable terms and rates.
- They are only for primary residences. Don’t waste your time trying to use your VA loan advantages to buy an investment property or a vacation home. Although VA loans are intended for primary residences, you can use this advantage to purchase a duplex or other multiunit property as long as you live in one of the units.
- They’re only for certain types of homes. If you’re planning to buy a working farm or a fixer-upper, the VA loan may not be suitable for you. It’s typically for properties in “move-in ready” condition, including single-family homes, townhomes, condos, modular and manufactured housing, some multi-unit properties.
- There is no mortgage insurance. With other loan programs where you don’t put down at least 20% on a home, you’ll have to pay mortgage insurance, which is a monthly fee. The VA guaranty eliminates the need for mortgage insurance or premiums, allowing borrowers to save even more money each month.
- With VA loans, there is no mortgage insurance, but there is a VA Funding Fee. This charge is required on both purchase and refinance loans to help the VA keep the program running. It can be financed into the loan amount and waived entirely for those with service-connected disabilities.
- You can borrow an unlimited amount of money. Qualified veterans can borrow as much as a lender is willing to offer them without having to make a down payment with the VA loan benefit. Obviously, this is a major advantage. Conventional loans typically require a down payment of at least 5%, but larger loans can easily reach 15% to 20%.
- They can be used again and again. You can use your VA entitlement as many times as you like as long as you pay the loan off each time. Even if you currently have a VA loan, you might be able to qualify for another.