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Veterans who qualify are eligible to take advantage of the VA mortgage loan program, a specialized loan type provided exclusively to veterans of the US Armed Services. These loans are backed and guaranteed by the Department of Veteran Affairs (VA) and are highly flexible.

What is a VA loan?

The VA loan program is a nationwide initiative that helps veterans purchase homes and refinance their mortgages. The goal of the program is to enable veterans who have served this nation bravely and selflessly to transition into homeownership and build stable wealth.

The VA itself does not provide any of the loans. VA loans are funded through private lenders, and VA rates are some of the best mortgage rates available in the entire mortgage marketplace. The government takes on some of the risk associated with a VA loan, and this allows lenders to provide multiple unique, favorable terms to veterans that are unavailable to other borrowers.

For more information, visit Lender411's article on the VA Loan Process.

What are requirements for a VA loan?

In order to be eligible to receive a VA loan, you must be either an honorably discharged veteran or currently involved in active duty for the U.S. military.

For veterans who served during wartime, a minimum of 90 days in service is required to qualify.
For veterans who served during peacetime, a minimum of 180 days of service is required to qualify.

Veterans enlisted after September 7 1980 must have served for at least two years.
Other people who qualify for VA loans include members of the National Guard or Reserves who have served for a minimum of six years and surviving spouses of veterans who passed away as a result of their service. To verify eligibility, borrowers must acquire a Certificate of Eligibility (COE).

Visit Lender411's in-depth article on VA Loan Eligibility.

Visit Lender411's in-depth article on VA Loan Qualifications.

Borrowers seeking VA mortgage loans must also meet requirements for current income, credit history and score, past bankruptcies, and debt-to-income ratio. These considerations are much less strict than those of other loan types, but ultimately lenders will set their own specific standards for approval.

Escrow accounts are usually required for VA loan borrowers.

For comprehensive information on VA loan requirements, visit Lender411's guide on VA Loan General Requirements.

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Who should get a VA mortgage loan?

Generally, any borrowers who are eligible for a VA mortgage loan and are looking to buy a home should take advantage of the numerous benefits. While conventional mortgages and FHA home mortgages may have some advantages over VA mortgages, the veteran-specialized benefits typically outweigh these advantages. If you are considering a VA loan, here is a list of questions that may help you determine whether it is the best option for you:

Am I eligible?

Before considering a VA loan, ensure that you are eligible by reading the VA Loan Application overview.

Do I have a low credit score?

VA loans have low credit score requirements, enabling many eligible borrowers to obtain a home mortgage loan with poor credit or even lack of credit. Even borrowers who have undergone foreclosure or bankruptcy may still qualify in many circumstances.

Do I want to invest?

Unlike other types of loans, VA mortgages only cover primary residences. Borrowers hoping to acquire funds for real estate investment should consider an alternative program.

What are the advantages of a VA loan?

No down payment on a VA Loan.
No mortgage insurance for a VA Loan.
No prepayment penalty.
VA Loan Closing Costs are negotiable.
Lenient credit and income requirements.
Mortgage transfer available.

More in-depth information regarding the Advantages of a VA Loan.

What are the disadvantages of a VA loan?

1.25% to 3% VA Funding Fee.
Eligibility requirements.
Maximum loan amount.
Some property type restrictions.

More in-depth information on the Disadvantages of a VA Loan.

What is VA entitlement?

VA entitlement is a representation of what the VA guarantees to repay the lender when a borrower defaults on their loan. The specific entitlement of any given borrower can be found on the Certificate of Eligibility. The Department of Veteran Affairs entitles a maximum amount of $36,000 for basic entitlement on loans up to $144,000, and up to $68,250 for bonus entitlement on loans greater than $144,000. VA entitlement can be somewhat tricky in terms of reusability and additional home loans: when a borrower pays off a VA loan, full entitlement is restored if they would like to secure another VA loan; in the event of a foreclosure, entitlement will be diminished until the loan is paid in full. If a VA home loan is transferred, the original borrower cannot get another loan or restore entitlement until the loan is paid off, unless the buyer is an eligible veteran who would agree to substitute entitlement for the same amount as the original borrower.

What are the VA limits on loan amounts?

For VA home loans, there is no maximum limit and borrowers can secure as much as a particular lender is willing to provide. However, the VA only guarantees a portion of the loan, depending on the location of the property. These limits on the VA guarantee are set by relative housing costs in the county where the borrower’s intended property is located.

In lower value home areas, limits for VA loans cap at $417,000, while limits may be up to $625,500 in areas with high valued homes. When a borrower secures more than the loan limit for a particular area, the VA only covers a portion of the loan limit, not the overall mortgage. Thus, on a $700,000 loan, the VA would guarantee $156,375, which constitutes one quarter of the $625,500 loan limit rather than one quarter of the $700,000 loan.

More information on VA Loan Limits.

What are the basic types of VA loans?

VA Fixed-Rate Mortgage.
Hybrid Adjustable-Rate Mortgage.
VA Construction Loans.
Graduated Payment Mortgage.
Growing Equity Mortgage.
Energy Efficient Mortgage.

If you are unsure of which type of VA loan best fits your situation, review Lender411's information on VA Loan Programs.

What refinance options are available with VA loans?

There are two types of VA Refinance loans: VA Cash-Out Refinance and VA Streamline Refinance (Interest Rate Reduction Refinance Loan). The major difference between the two is that a VA Cash-Out Refinance lets borrowers take cash out of their home equity, whereas a VA Streamline Refinance allows for the reduction of a borrower’s current interest rate. Qualified VA borrowers may also refinance pre-existing conventional loans into VA loans to achieve lower interest rates when applicable.

Click here for more information on VA Loan Refinancing Options.

What property types are allowed by the VA?

VA loans are typically designed for single-family homes and only cover primary residences. Condominiums and townhomes may also qualify for VA funds if they are VA-approved. For properties of this type not already approved, borrowers may fill out forms to submit to the VA to find out whether the property will qualify.

Some manufactured homes may be eligible for financing if they are classified and taxed as real estate and affixed to a permanent location and foundation. Manufactured homes must conform to building codes and zoning requirements. However, even though the VA presents guidelines for condominiums, townhouses, and manufactured homes, individual lenders have their own guidelines and may not offer VA loans for all types of property.

Single-Family Homes.
Condominiums and Townhouses (with restrictions).
Manufactured Homes (with restrictions).

Frequently Asked Questions about VA Loans

Visit our comprehensive VA Loan FAQ, or feel free to submit your own questions here. All inquiries will be answered by qualified and trusted VA lenders.