What Is A VA Loan?

VA Loan

If you’re a veteran or currently serving in the military you are eligible for a VA loan. A VA loan is backed by the Department of Veterans Affairs and is designed to help veterans, current military members, and military spouses buy a home. They’re pretty easy to qualify for and don’t require a down payment.  VA Loans are issued by private lenders but are insured by the government. That means the VA agrees to pay a portion of the loan to the bank if you don’t make your payments.

Since the banks assume less risk compared to conventional loans, VA loans are comparatively easy to qualify for. Some key features of a VA loan are:

  • No Down Payment – VA loans are one of the last zero down payment option mortgage loans still around.
  • No Loan Limit – There is no limit on the amount you can borrow on a VA loan, but there is a limit to how much liability the VA will take on. The VA will guarantee a maximum of 25% of a mortgage up to a value of $453,100, the conforming loan limit.
  • No Private Mortgage Insurance – Since it is backed by the government, there is no need to pay PMI
  • No credit score requirement – A credit score of 620 is still preferred though
  • Can only be used to purchase a primary residence – No investment properties allowed
  • Only certain types of properties are eligible – Vacant land and Co-ops don’t qualify
  • The VA aids struggling borrowers – The VA loan technicians can negotiate on behalf of the borrower who is having difficulty making payments
  • No prepayment penalty

See our VA Loan Programs

Who is eligible for a VA Loan?

To get this kind of loan, military personnel must meet the VA specific service requirements. You’re generally eligible if you fall into one of these categories:

  • You are active duty or an honorable discharged veteran with 90 consecutive days of active service during wartime or 181 days of active service during peacetime.
  • You have served more than 6 years in the National Guard or the Selected Reserve
  • You’re a surviving spouse of a member who died in the line of duty

When you’re applying for a VA loan you must show the lender a Certificate of Eligibility to show that you qualify.

Apply for a VA Loan Now!

What Are The Drawbacks of a VA Loan?

The zero down payment can be a dangerous trap – A small shift in the housing market may leave you owing more on the house than it’s worth. This means you’re over paying for you home until the market recovers or you’ll take a financial loss if you have to sell your house in a hurry.

VA Loans require a funding fee – The funding fee varies between 1.25% and 3.3% of the total loan amount. This fee is usually included in the loan so it increases your monthly payment and adds to the interest that you’ll have to pay over the life of the loan.

See what other loan programs we offer

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