Getting a VA Loan : What You Should Know about Department of Veterans Affairs Home Loans

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It was 1944 when Congress launched the VA Loan Guaranty Program in order to help military folks returning home to buy their own abodes. The Department of Veterans Affairs has provided more than 18 million military members with the ability to buy homes.

Getting a VA Loan



The attractive feature about a VA loan is that it’s a lending option that enjoys competitive rates and loan terms for veterans who qualify for the funding. The VA guarantees to repay approximately one fourth of the loans they guarantee if a borrower defaults, which is a rare event.


The best benefit of the VA loan is that it is one of the few choices available today that allows borrowers to purchase a home with no money down. Outside of other government home loan programs, it’s next to impossible to get 100% financing from lenders.

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Basically, approximately 80% of VA loan recipients would not be able to quality for other standard types of loans. The beauty of VA loans rests in the fact that their requirements aren’t as strict as other loans, plus they have no private mortgage insurance, or PMI, as it is known in the industry.

The interest rates of VA loans are generally lower than conventional mortgage loan rates, and there aren’t the types of prepayment penalties levied against borrowers who choose to pay back their standard loans early.
Similar to FHA loans, VA loans allow for higher debt-to-income ratios.The are streamlined loans with broad eligibility requirements, but less that 10% of the 25 million veterans across the country use this benefit. Some vets don’t know if they are eligible and others don’t know how to get a VA loan. A 2004 survey revealed that 20% of veterans knew nothing about the VA Loan Guaranty Program.


Millions of veterans and active-duty service members can take out a VA loan, if they meet certain requirements stipulated by the government.
A few of these conditions include people in the military who’ve served 181 days of active duty or at least three months during wartime. Folks who’ve been in the National Guard or Reserves for at least 6 years can also be eligible, as well as the spouses of those killed in the line of duty.


The Certificate of Eligibility is a formal document received from the VA that confirms the homebuyer is indeed entitled to be a part of the loan program. Both veterans and active-duty service members have to obtain the certificate and learn the entitled amount of funding that the Veterans Administration will guarantee for a loan.

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The Request for Certificate of Eligibility form can be downloaded online. Lenders that have been approved by the VA can also act as a resource to assist veterans in obtaining and completing these forms automatically and electronically.

Not all folks who are eligible for VA loans will receive one.


For the most part, people use VA loans to buy or build single-family homes. But they can also be used by veterans to help improve their existing living conditions or to save money monthly via refinancing.
Veterans might use VA loans to refinance a current VA-guaranteed or direct loan to lower the current interest rate or to get cash by refinancing.
If a veteran owns a residence, they can use the VA loan to repair or update the home – and even improve it while buying a new home.
They can use an energy efficient mortgage along with a VA loan purchase or refinance to improve the energy efficiency of a residence, or even buy a VA-approved condo unit.

Farm residences as well as manufactured or modular homes are other options for purchase with VA loans. VA loans cannot, however, be used to buy investment property, because the main goal is to help vets own their own homes, not to build their real estate businesses or portfolios.


There is no real maximum limit on VA loans, because the amount gained depends on a variety of factors. Nationwide, borrowers that qualify for VA loans can get one up to $417,000 without putting any money down. In more expensive counties, that limit can rise to $625,000 and above.


VA loans cover most of the costs of receiving the loans without buyers needing to put down one dollar as a down payment or for closing costs. There are some costs, like appraisals, that veterans often have to pay for themselves.
There is also a VA Funding Fee, a charge that helps the program remain in existence, which has to be paid as well.


Even though VA loans have been a major boon to many millions of veterans for years, they may not be for every veteran. While those with poor credit might find them a worthy option, VA loans might not be the best choice for veterans with greater liquidity and cash reserves, because they might find better interest rates elsewhere.

VA loans might also not be very attractive to all sellers, because they usually pay all or most of a veteran’s closing costs. An inescapable fact is that VA loans have the reputation of being slow and complicated to process, although the agency is more efficient than in past years. In light of all these factors, VA loans might be the best option for many a hard fought veteran.

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Getting a VA Loan : What You Should Know about Department of Veterans Affairs Home Loans
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