WHAT IS A VA LOAN?
A VA loan is a mortgage loan that’s backed by the Department of Veterans Affairs (VA) for those who have served or are presently serving in the U.S. military. While the VA does not lend money for VA loans, it backs loans made by private lenders (banks, savings and loans, or mortgage companies) to veterans, active military personnel, and military spouses who qualify.
There are three types of VA loans: purchase loans, interest rate reduction refinance loans (or IRRRL, also referred to as a VA streamline refinance loan), and cash-out refinance loans. There are many benefits to a VA loan, but one of biggest benefits is that no down payment is needed to purchase a home. This can make home ownership a reality for active military or veterans who might otherwise not be able to afford it.
WHO IS ELIGIBLE FOR VA LOANS?
VA loans are designed for military personnel, veterans, and military families. The list of those who are eligible for this home-buying military benefit include:
- Veterans
- Active-duty personnel
- Reserve members
- National Guard members
- Some surviving spouses
You must also have suitable credit, sufficient income, and a valid Certificate of Eligibility (COE). And you must use the home for your own personal occupancy. Still unsure if you’re eligible? Check the Department of Veterans Affairs website for a detailed list of eligibility requirements for military service members, veterans, and military spouses.
HOW IT WORKS
VA Loan Features
- 30-, 20- and 15-year fixed-rate loans and 5-year ARM loans available
- Jumbo VA loans available up to $1,500,000
- Buy a home with no money down
- VA Streamline refinance – available for veterans currently in VA loans – has reduced funding fees and minimal documentation
- No monthly private mortgage insurance (PMI)
How VA Loans Work
- Credit scores as low as 620 may qualify for VA loans
- Use your basic allowance for housing toward your monthly mortgage costs
- Prepay your mortgage at any time without penalties
- Roll the funding fee into the loan amount to limit closing costs
Key Points
- Valid certification of eligibility
- Low or no down-payment
- High cash-out LTV
- Low interest rate
