VA Home Loans - Benefits

What is a VA Home Loan?

The VA Home Loan program allows a qualified veteran to obtain a home loan with no money down, and in most cases even the closing costs can be financed into the balance of the VA Home Loan.  Other than a no down payment mortgage option, there are other incentives of a VA loan like not having to pay for private mortgage insurance (PMI) which can add fees and costs associated with a FHA or conventional mortgage.


Eligibility Requirements for a VA Home Loan


Although there are some restrictions, generally any military Veteran is eligible to Qualify for a VA Home Loan as long as the purchase of the home is intended to be occupied as a primary residence.  Typically a military veteran or service member of the US Armed Forces must have served on Active Duty for at least six months (or the equivalent of 6 months for Military Reserve and National Guard personnel) in order to meet  VA Home Loan Eligibility Requirements


VA Home Loan Benefits


Probably the best benefit of a VA loan is being able to finance 100% of the purchase price as well as the VA funding fee, some closing costs, and loan percentage points and home inspections and repairs which the seller may be required to pay.


Interest Rates on a VA Home Loan


VA home loan rates are competitive, although in recent years buyers may be able to find traditional loans either through FHA or conventional as having a lower interest rate than  VA Home Loan Interest Rates because the federal government has dropped the prime lending rate on many securities and bonds which are directly tied to mortgage interest rates.


VA Home Loan Limits


VA home loans are generally limited to $417,000 because most lenders sell the loans on the secondary market which creates a maximum limit on traditional loans including the VA Home Loan.  High cost areas including properties in Hawaii, Guam, Alaska and certain locations with special programs like the Cal Vet Home Loan Program, have mortgage loan limits which can be as high as $625,000 or higher; this of course varies by metropolitan area and income restrictions. For additional information on rates, service members should also check the loan amortization using the VA Home Loan Calculator to better understand monthly payments.


VA Home Loan Guarantee


VA Home loans are guaranteed by the Veteran’s Administration (VA) and are underwritten by private mortgage lenders in the traditional home loan market which includes banks, savings & loan companies, or mortgage brokers who process all types of loans including FHA, conventional, jumbo, and VA home loans.


The VA Home Loan Process


Veterans and service members obtaining a VA home loan will generally work directly with a mortgage broker, who in turn works directly with private  lenders (such as banks, credit unions, mortgage companies) to determine VA loan rates and terms in order to package the loans to investors.  The Department of Veterans Affairs does not hold a VA loan or process the loans, they simply guarantee the mortgage home loan on behalf of the veteran or military service member.


VA Loan Certificate of Eligibility


The VA may issue a certificate of availability to a buyer or a DD-214 may in some instances be able to serve as proof of the veteran’s service.  Typically the lender will require the borrower to obtain verification of service through a VA certificate of eligibility provided by the Department of Veterans Affairs.


VA Home Loans with Bad or Poor Credit


Veterans or service members looking to obtain a  VA Home Loan with Poor or Bad Credit including a history of defaults, foreclosures or a short sale resulting in a deficiency judgment, or even bankruptcy, may find that a VA loan is a viable option as long as the credit report has shown improvement over a 2-3 year period since the most recent delinquent or derogatory item on the buyer’s credit report.


Mortgage Loan Calculator


A mortgage loan calculator may be the best resource for finding out the interest rate and the total payment amount including principal and interest amortization and payments over the course of the home loan. Check payment amounts and amortization with a VA Home Loan Calculator.


Department of Veterans Affairs Backed VA Loans


VA Home Loans are mortgage loans that at are guaranteed by the U. S. Department of Veterans Affairs (VA). When describing these mortgage loans as being “backed” by the Department of Veteran Affairs this means that if the home owner defaults on a VA Home Loan, the Department of Veterans Affairs is insuring the mortgage note owner (bank, credit union, or mortgage investor) against any loss if the homeowner defaults on the loan.


VA Home Loan Limits 2012 – 2013


The VA has established loan limits for 2012 – 2013 at $417,000 and more in select areas.  Certain high cost living areas including Hawaii and Alaska have an increased eligibility limit similar to a jumbo loan.