VA Home Loan Introduction
Getting a VA Loan can be a confusing and stressful process, but with the right information, it can be a smooth and easy experience. This guide will provide you with everything you need to know about getting a VA Loan, from what it is and how it works, to the benefits and drawbacks. With this complete guide, you'll be on your way to getting the loan you need in no time.
What is a VA Loan?
Today, more than ever before, it is important to understand the various types of loans available to you. We have discussed a few of the most common types of loans, such as conventional loans and loans for veterans. In this section, we will discuss one of the most popular loans available to active duty service members and veterans - the VA loan. In order to qualify for a VA loan, you must be a military member or veteran who has served on active duty and is either living in barracks, at sea, or in quarters and is not employed outside the military. We will discuss the benefits of a VA loan, how to apply, the application process, pre-approval steps, closing costs, and what to expect after closing.
The VA home loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs (VA). The program is for American veterans, military members currently serving in the U.S. military, reservists, and select surviving spouses (provided they do not remarry) and can be used to purchase single-family homes, condominiums, multi-unit properties, manufactured homes, and new construction.
The original Servicemen’s Readjustment Act was signed into law by President Franklin D. Roosevelt in 1944. It provided many services and benefits to veterans who had served during World War II. The VA loan guarantee program was particularly important to veterans. Under the law, as amended, the VA is authorized to guarantee or insure home, farm, and business loans made to veterans by lending institutions. At the beginning of 2020, more than 25 million VA home loans were covered by the U.S. Department of Veteran Affairs.
Who is Eligible for a VA Loan?
For those eligible, VA loans are an attractive option because they don't require a down payment. They also have lower interest rates than many other types of mortgage loans you can get for similar terms. Plus, there is no monthly mortgage insurance.
It's also important to keep in mind that many lenders may have different requirements for qualification, but VA loans tend to have more lenient credit requirements than other mortgage programs.
- 181 days of active duty peacetime service
- 90 consecutive days of active duty wartime or combat service
- 6 or more years of service with the National Guard or Reserves, or 90 days under Title 32 with at least 30 of those days being consecutive
- You’re the spouse of a service member who lost their life in the line of duty or as the result of a service-connected disability. You generally cannot have remarried, although there are exceptions, as well as other requirements for a spouse getting a VA loan.
The Application Process for a VA Loan
Select a VA-approved lender or mortgage broker like Mission Pacific Mortgage
Obtain your Certificate of Eligibility (COE)
Get pre-qualified (optional)
Find your dream home and sign a purchase agreement
Loan application is processed and VA appraisal is ordered
Your loan is closed and move In
What is a VA Loan Entitlement?
VA Loan entitlement is the dollar amount that VA will guarantee on each VA home loan and helps determine how much a veteran can borrow. VA loan entitlement is typically either $36,000 or 25% of the loan amount, whichever is higher.
What is the Funding Fee for a VA Loan?
The VA loan funding fee is a one-time fee charged by the Department of Veterans Affairs (VA) to help cover the cost of the VA Home Loan Guaranty Program. The fee is paid by the borrower and may be financed into the loan. The amount of the funding fee varies depending on the type of loan, the amount of the down payment, and whether the borrower is a veteran, reservist, or active duty service member.
VA interest rate reduction refinance loans (IRRRLs)
The VA IRRRL is a great way to get a lower interest rate on your mortgage. If you are a veteran, you may be eligible for this program. You can refinance your loan and get a lower interest rate, which can save you money over the life of your loan. The VA IRRRL program is unique in that it provides a fixed rate for a specific period of time, after which the borrower begins to pay a variable rate. This can be a good option for borrowers who want to lock in a rate, particularly if they have a floating interest rate and are planning to switch to a fixed-rate mortgage.
What's a VA Certificate of Eligibility (COE) and how do I get one?
A VA certificate of eligibility is an official document from the Veterans Administration that shows that you qualify for a VA-backed loan. If you are a veteran looking to apply for a VA loan, you will need to obtain a VA certificate of eligibility (VA COE). This can be done through the Veterans Administration website. Once you have obtained your VA COE, you will need to submit it to the lender as part of your loan application. You can also use your VA COE to apply for private loans. However, many private lenders require borrowers to have a credit score of at least 620. If you’re trying to get a mortgage or personal loan, make sure you check with the financial institution to see what their requirements are.
How many times can I use my VA loan benefit?
If you've ever used a VA loan or thought about applying for one, then you've probably wondered, "How many VA loans can I take out? " The good news is that there is no limit. As long as you're eligible and you're able to qualify with a lender, there's no limit to how many times you can take out a VA loan in your lifetime.
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