What is a VA Loan?

Veterans Administration (VA) home loans are guaranteed by the VA and can be used to purchase a home or refinance an existing mortgage. VA home loans are available for active, non-active, Reserve, National Guard, and retired members of all branches of the United States military. Literally millions of veterans and service personnel are eligible for VA financing.

Does the VA provide the money for the loan?

The Veterans Administration does not actually provide loan funds. The mortgage is provided by a traditional lender, and the VA insures a percentage of the loan by giving the lender a guaranty that their investment will not be completely lost if the borrower defaults. That's why a VA loan is called a government-guaranteed loan. However, keep in mind that this guaranty is not a promise that the veteran will qualify for a VA loan.

Primary Benefits of a VA Home Loan

  • 100% financing, no down payment required
  • Perfect credit not required
  • No monthly mortgage insurance (MI) required
  • Available for purchase or refinance
  • Limitation on veteran's closing costs; seller can pay up to 4% of the closing costs
  • Seller can pay down veteran's debt to help reduce debt-to-income ratio
  • VA loan are assumable, subject to VA approval of the assumer's credit
  • 30 year fixed loan with interest rates similar to FHA

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