What is a VA Loan?
A VA loan is a mortgage issued by private lenders and guaranteed by the U.S. Department of Veterans Affairs. This type of loan has no down payment requirement, competitively low-interest rates, limited closing costs, and no need for Private Mortgage Insurance (PMI). The VA home loan is also a lifetime benefit, which means you can use the VA guaranty multiple times.
The VA guaranty means if a borrower can no longer afford their mortgage payments, the US government will reimburse the lender for a certain percentage of the borrowed amount. This decreases the risk for the borrower and allows lenders to provide positive terms and no down payment.
Who Qualifies for a VA Loan?
You likely qualify for a VA mortgage if you are one of the following:
- Active-duty military member
- Surviving spouse of a service member who died in active duty
- Surviving spouse of a service member who died from a service-connected disability
- Spouse of a prisoner of war
- Spouse of a service member missing in action
All active-duty military members and veterans must meet length-of-service requirements to qualify. Surviving spouses of service members who died in active-duty military or from service-related disabilities must not be remarried or must have remarried after the age of 57 or after December 16, 2003.
Additional qualifications include meeting the lender’s requirements for credit and income and making sure the property you are purchasing meets all the VA safety standards and building codes requirements.
Types of VA Loans
There are actually multiple types of VA loans:
VA Purchase Mortgage
This is loan is for home purchases and requires no minimum down payment.
VA Cash-Out Refinance
This loan can replace a VA loan or a conventional mortgage loan and can also turn homeowners’ home equity into cash.
VA Streamline Refinance
Also known as a VA Interest Rate Reduction Refinance Loan (IRRRL), this loan replaces a VA mortgage with another VA loan to lower the interest rate or to refinance from an adjustable to a fixed rate.
VA Rehab and Renovation Loan
This loan provides financing for the cost of home improvements.
Native American Direct Loan (NADL)
A NADL loan helps eligible Native American veterans purchase, construct, renovate, or refinance a home on federal trust land.
How To Apply for a VA Loan
To apply for a VA loan, you first need to retrieve a Certificate of Eligibility from the VA. This certificate verifies that your military service meets all the VA requirements. A VA-approved lender can get this document from the VA for you. You can also have this certificate sent to you by the VA directly online or by mail.
After verifying your eligibility, you need to find the right mortgage lender. Your mortgage lender will need to be VA-approved. And finally, you will need to shop for a home and sign a purchase document! This home will need to meet the property requirements specified by the VA to guarantee that it is safe, clean, and structurally sound.
Contact a Loan Specialist
Ultimately the best way to determine if you qualify is to speak with a loan specialist from a VA-approved lender. Our loan specialists at VeteransLoans.com can answer all of your questions and help you verify your eligibility status. Call 1 (888) 232-1428 to speak with a loan specialist today!