The VA loan program is the most powerful home loan program on the market for many service members, veterans, and military families. This government supported loans come with big advantages that unlock the doors of home ownership to service members and veterans who might otherwise strain to get financing.

What is a VA loan?

The VA loan is a mortgage loan granted by authorized lenders and guaranteed by the United States Department of Veterans Affairs (VA). The VA program was started in 1944 by the U.S. government to help eligible surviving spouses, and service members buy homes without needing an excellent credit or down payments.

While the Department of Veteran Affairs doesn’t give money for VA loans, it guarantees loans made by private lenders (mortgage companies, loans, and savings, or banks) to qualified military spouses, veterans and active military personnel. Additionally, VA dictates the terms of the mortgages offered, insure VA loans against default and establishes the rules for those who qualify.

There are three types of VA loans: cash- out refinance loans, interest reduction refinance loans and purchase loans. These loans require no private mortgage insurance or down payment. Interesting enough, they allow qualified borrowers to buy a home with little or no money out of their pockets and feature competitive rates and terms.

The VA Loan Advantage

Borrowers who qualify for VA loans receive a lot of benefits that make this line of financing one of the most attractive options out there. VA home loans remove many barriers to home ownership and allow veterans and eligible service members to purchase a home easily. The VA loan is simply the best way to buy a home. Why? Because with a VA mortgage:

No down payment is required

Let’s face it, building credit and saving money can be difficult for service members who are constantly on the move. Fortunately, with VA loan, qualified borrowers can finance one hundred percent of the property’s value without a down payment.

This is perhaps the biggest advantage to a VA loan. You don’t need a down payment. None whatsoever.  This means you may finance any amount up to the total cost price as long as it’s not greater than the appraised property value. With a VA loan, you can purchase your dream home without delay, rather than after many years of saving for a down payment.

No mortgage insurance is required

Mortgage insurance is a monthly fee you pay with conventional lenders when you’re not putting at least twenty percent down, which is a tough task for many veterans. The VA’S guaranty reduces the need for mortgage insurance premium or any mortgage insurance, helping you save more money. This VA loan benefit lets you build up more equity in your home, saving you thousands of dollars over the life of your mortgage.

Competitive interest rates

Since they are guaranteed by the VA, lenders are able to offer lower interest rates with no minimum down payment requirement. VA loan rates are usually 0.25 to 1 percent lower than those of conventional loans. The VA backs the mortgages, making them a lower risk for lenders. However, the rates are still determined by the same factors, such as history and credit score, but they’re highly competitive compared to conventional loans.

Pair the ability to buy your dream home with no private mortgage insurance and that lower interest rate and the savings start adding up drastically.

No prepayment penalty

With most conventional loans, settling a home loan before it matures leads to a prepayment penalty. This is because lenders forego on additional opportunities to collect interest payments.  Without a prepayment penalty, borrowers are free to consider refinancing options and future home purchases.

You can make extra payments anytime you want, saving you a lot in interest over the life of your loan. Even better, you can set your payments to automatically subtract a certain amount every month. Just an extra one hundred dollars monthly can shave many years and tens of thousands of dollars from the balance.

Use your benefit again and again

There is a widespread fallacy that you can only use this program once. That is untrue. Furthermore, it is possible to have more than one VA loan at the same time or obtain another after losing one to foreclosure.

Assuming you bought a house with a VA loan, but need something bigger. When you sell the house and pay off the VA loan completely, you can re-use your benefit to buy another house. Your entitlement as a service member or veteran is restored in full.

FAQs on VA home loans

How can I qualify for a VA loan?

To meet the requirements for a VA loan, you should have prequalified with a VA authorized lender. Prequalification takes less than ten minutes, and you’ll be notified if you qualify for the VA loan. It’s important to understand that preapproval and prequalification aren’t binding and don’t create any sort of obligation between you and the lender.

I was declared bankrupt, or I have bad credit. Can I still get a VA loan?

VA loans are subject to similar terms as conventional loans, as they are provided by private lenders. The necessary income requirements and credit status still apply. Also, mortgage qualification is still determined based on the conditions that lenders lay down.

What can I purchase with my VA loan?

VA home loan programs may be used to obtain condominium, townhouse, or manufactured homes; install energy saving improvements; refinance your current home loan if you’re eligible, or make other qualified home improvements.

Can I use the program more than once?

The great thing about VA loans is that if you have previously bought a house with a VA loan, sold it and cleared the current loan, you can get your entitlement restored.

What VA cannot do

The VA appraisal is not intended to be an inspection of the property. Therefore, VA cannot guarantee that the house you purchase will be free of defects. In case you have any doubts about the condition of the house, it’s in your best interest to seek expert advice.

VA only guarantees the loan and not the condition of the home. Consequently, it’s your duty to be an enlightened buyer and reassure yourself that what you’re buying is satisfactory to you. In a nutshell, VA doesn’t have the authority to provide you with legal services.


The VA home loan program is an outstanding asset for veterans and members of the armed services. With competitive interest rates, no PMI, and no down payment, home ownership is now possible for military members on a tight budget.

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