What is a VA Loan?
The VA Loan is a fantastic program and benefit to those who have served our country. Unlike other mortgage programs, a VA Loan is a mortgage option issued by private lenders and partially backed (or guaranteed) by the Department of Veterans Affairs. Like other home loan options, the VA Loan program can be used to purchase or refinance a Primary Residence.
With the Department of Veterans Affairs guaranteeing a portion of the loan, qualified borrowers benefit from a lender providing more favorable terms. Here are some of the benefits:
Eligible homebuyers usually do not have to provide a down payment. This is typically cited as the greatest VA loan benefit. Conventional loans generally require a 5% down payment and FHA loans require 3.5%.
No monthly mortgage insurance premiums or PMI to pay. Comparatively, FHA loans come with both an upfront and an annual mortgage insurance charge. Conventional buyers are typically required to pay for private mortgage insurance unless they’re making a down payment of 20 percent or more.
Limitations on buyer’s closing costs.
Lower average interest rates than other loan types. VA loans continue to have the lowest average interest rates of all loan types.
VA Loan Eligibility
You may be eligible for a VA loan if you meet one of the following requirements:
- You have served 90 consecutive days of active service during wartime, OR
- You have served 181 days of active service during peacetime, OR
- You have six (6) years of service in the National Guard or Reserves, OR
- You are the spouse of a service member who has died in the line of duty or as a result of service-related disability.
