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Overview of VA Home Loans

Straight Study

Approved loan applicationThe US Department of Veterans Affairs (VA) created the VA loan in 1944 with the aim of helping veterans, military members who are still on active duty, and qualified military spouses get home financing. The loan does not directly come from the Department of Veterans Affairs, rather it identifies qualified applicants, establishes the rules and terms surrounding the mortgage, and guarantees the loans made through private and independent lenders against default.

This fact allows most lenders to give more flexible loan terms to qualified applicants. However, the VA loan program can only be used to buy homes that are meant to be the borrower’s primary residence.

Advantages of VA Loan Over Conventional Mortgages​

A veteran with a VA loan does not need to pay the usual 20% down payment required for traditional home loans as long as its price is not more than the appraised value. The interest rates are also very competitive and lenders do not require private mortgage insurance (PMI).

Furthermore, the VA rules state that qualified applicants do not need to pay more than the closing limit of the loan program. A VA loan usually does not impose a minimum credit score, but some lenders require one. Another great thing about this type of home loan is that you will not be penalized if you wish to repay your mortgage earlier than the agreed schedule. 

VA Loan Eligibility​

Most veterans, military personnel on active-duty, National Guard members, and reservists may qualify for a VA loan. Surviving spouses of military personnel who are suffering from a service-related disability or have perished while on active-duty may also qualify. National Guard members and reservists can qualify for this loan program after six years of service, but they can qualify after a shorter period if they get called to active service.

Members on active duty during times of war may qualify after only 90 days. Borrowers must have a valid Certificate of Eligibility (COE), which they could submit online.

The VA loan is a program created to help veterans and active military personnel buy a house without having to deal with the strict rules and costs imposed on conventional mortgage loans.