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V A   L O A N S

Why a VA loan?

The more you know about our home loan program, the more you will realize how little "red tape" there really is in getting a VA loan. These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan.

More than 29 million veterans and service personnel are eligible for VA financing. Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.

Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans

  1. Most important consideration, no down payment is required in most cases.
  2. Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Due to secondary market requirements, however, loans generally may not exceed $240,000.
  3. Flexibility of negotiating interest rates with the lender.
  4. No monthly mortgage insurance premium to pay.
  5. Limitation on buyer's closing costs.
  6. An appraisal which informs the buyer of property value.
  7. Fifteen and thirty year fixed rate loans
  8. For most loans for new houses, construction is inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year warranty is required from the builder that the house is built in conformity with the approved plans and specifications. In those cases where the builder provides an acceptable 10-year warranty plan, only a final inspection may be required.
  9. An assumable mortgage, subject to VA approval of the assumer's credit.
  10. Right to prepay loan without penalty.
  11. VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.
What is a VA-Guaranteed loan?

These loans are made by a lender, such as a mortgage company, savings and loan or bank. VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn't previously used the benefit may be able to obtain a VA loan up to $240,000 depending on the borrower's income level and the appraised value of the property. The local VA office can provide more details on guaranty and entitlement amounts.

Requirements for loan approval

To obtain a VA loan, the law requires that:

  1. The applicant must be an eligible veteran who has available entitlement.
  2. The loan must be for an eligible purpose.
  3. The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.
  4. The veteran must be a satisfactory credit risk.
  5. The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.