The main purpose of the Veteran Affairs (VA) home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is competitive with the rate charged on other types of mortgage loans. The VA Home Loan Guarantee Program helps veterans purchase, refinance, or builds homes through VA-approved lenders.
Loans are backed up to $417,000 and more in some areas with low closing cost and fewer fees than conventional loans. Packed with money-saving advantages such as no down payment requirement and no private mortgage insurance, the VA home loan also is designed specifically for the unique challenges facing service members and their families.
The VA remains one of the few mortgage options that doesn’t require a down payment. These loans are available to over 22 million American veterans, and are easier to qualify for than many other types of loans such as, FHA loans and conventional bank loans.
VA loans are available to most members of the U.S. military, National Guard, veterans, and reserves. Spouses of active military members who have died are also eligible to apply for the loan as well. Active military members are eligible for VA loans after 6 months of service, while reservists and members of the National Guard are eligible after 6 years of service. Before applying for this type of loan, applicants must fill out a certificate of eligibility that can be found online at the U.S. Department of Veterans Affairs.
VA loans have several distinct advantages that make them attractive to veteran home buyers.
VA loans still carry a one-time funding fee that varies depending on the type of veteran, and whether or not a down payment is made. For example, first time borrowers who are active military members that put zero percent down must pay 2.15 percent of the loan in funding fees. The fee is reduced to 1.25 percent if the veteran makes a 10 percent down payment. If a vet applies for a VA loan for the second time without any money down, they must pay 3.3 percent of the loan amount in funding fees.
Like with any other loan, VA loan borrowers must show proof of sufficient income to make payments on the loan to lenders before loans are approved. Also applicants with little to no debt are more likely to be approved for a VA loan than candidates with excessive debt.
VA loans are only available to finance primary homes, and cannot be used to refinance or fund vacation homes. The limit for VA loan amounts vary depending on where the home is located. On average a VA loan ranges from $417,000 to $1,094,625.
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