If you’re an active member of the military, or a veteran, a VA home loan might be a great option for getting a mortgage. Here are answers to the most frequently asked question about VA loans.
What is a VA Loan?
A VA loan is a mortgage loan that’s issued by private lenders and backed by the U.S. Department of Veterans Affairs. VA loans were introduced as part of the GI Bill in 1944. It helps U.S. veterans, active duty service members, and widowed military spouses buy a home.
Is Using My VA Loan Eligibility a Good Idea?
These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran’s certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan.
What are VA Loan Requirements?
VA loans are a benefit to qualified veterans and active military service personnel.
You’re probably eligible if one of these is true:
- You served 90 days of active duty during wartime
- You served 181 days of active duty during peacetime
- You served six years in the Reserves or National Guard
- You are a surviving spouse of a service member who died in the line of duty or as a result of a service-related disability.
What service is not eligible for a VA Home Loan?
You are not eligible for VA financing solely based upon Active Duty for Training in the Reserves or National Guard.
What are the Benefits to a VA Loan?
- You can buy a home with no down payment. (VA loans are one of the last zero-down home loans available today).
- There is no limit to the amount you can borrow on a VA loan, but there is a limit to the amount of liability the VA takes on.
- You won’t have to pay Private Mortgage Insurance (PMI).
- There’s no minimum credit score requirement. But lenders typically still look for borrowers with a credit score of 620 or higher.
- The VA offers assistance for struggling borrowers facing a potential foreclosure.
- There is no prepayment penalty. This means you won’t be fined if you pay off your loan early.
- You don’t need to be a first-time home buyer in order to get a VA loan.
- Bankruptcy and foreclosure won’t permanently affect your chances. You can still qualify for a VA loan after two years have passed from the date of the bankruptcy or foreclosure.
What is the Maximum VA loan?
The maximum guarantee authorized by the VA is 25 percent of the loan amount up to $113,275. The maximum VA home loan is $453,100.
Does a Veteran’s Home Loan Entitlement Expire?
Home loan entitlement is good until used if a person is on active duty. Once discharged or released from active duty before using an entitlement, a new determination of their eligibility must be made based on a case-by-case basis.
Can you take out a VA loan for a second home or vacation cabin?
The law requires that you certify that you intend to occupy the property as your home. But it specifically provides that occupancy by the veteran’s spouse satisfies the personal occupancy requirement.