The VA Mortgage Loan: A short guide – In 2013, the mortgage program of the US Department of Veteran Affairs (VA) marked its 70th anniversary. It was one of the strongest years for VA loans since
their introduction in the market. Some 630,000 new loans were guaranteed by the Department in 2013. Find out more about these products and their features, benefits and drawbacks and check whether you qualify.
The VA Mortgage Loan: A short guide
Loan Basics
The VA mortgages are home loans backed by the Department of Veteran Affairs. The Department does not issue them. The loans are available from various
different lenders participating in the program. They have similar features compared to their conventional counterparts, but there are some notable differences
as well. These home loans are generally designed for veterans and active duty personnel, but other home buyers may be able to qualify as well.
Eligibility
Veterans and active duty personnel are automatically eligible for VA mortgage loans. National Guard and Reserve members can also qualify if they meet a set
of criteria. These are at least 90 days of active service completed after 1990 and honorable discharge, retired list placement, transfer to the Standby Reserve
or Ready reserve after discharge as honorable or continuing service in the Selected Reserve. Surviving spouses of veterans, who died, went missing in action or
were taken as prisoners of war, can also qualify. They have to have remained unmarried or may have remarried, but under certain conditions in order to be
eligible for such a home loan.
Since the loans are available from conventional lenders, applicants have to meet general affordability criteria. These criteria are based on income, debt-to-
income ratio and credit score.
Loan Features
The VA mortgage loans come with various amounts. The maximum loan amount is $417,000, but this limit is flexible in areas with high property prices and in special circumstances. The loans require no down payment. At the same time, home buyers can put down any amount which they deem fit. There is a funding fee which is calculated as a percentage of the loan amount. It is 2.15% for first-time home buyers making no down payment. When a down payment of 10% is made, the percentage drops to 1.25%.
The interest rates are negotiable. They can be considerably lower compared to those on conventional loans, especially for home buyers who have less than perfect credit score and credit history. There is no mortgage insurance with the VA loans. There is no penalty fee for early repayment either. The home buyer has to pay the same types of closing costs, but they are typically lower.
Personal loan servicing is provided directly by the Department of Veteran Affairs. There is financial counseling for homeowners who have difficulties with the loan repayment. Refinancing via special programs is available as well.
Advantages for Military Homebuyers
The VA Loan has many advantages that make it one of the most appealing paths to homeownership — and this great benefit is reserved exclusively to those who bravely served our country and select military spouses.
When combined, the benefits of the VA mortgage allow service members and Veterans to take advantage of substantial cost savings under qualification requirements designed specifically for members of the military and their unique needs.
Lower Payments
Competitive interest rates and no private mortgage insurance mean lower monthly payments.
No Down Payment
The VA Home Mortgage is one of the only home loans available today with no down payment required
Easier to Qualify
The VA Loan Program provides homeownership opportunities for millions who wouldn’t otherwise qualify for conventional financing.
First-Time Buyers
No down payment and relaxed credit standards means loans from the VA Program are especially helpful for first-time homebuyers.
