A VA Loan is Designed to offer long-term financing to veterans. VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice. It is generally easier to qualify for a VA loan than conventional loans.
What is an VA Loan?
The Complete VA Consumer Guide
The VA loan is a $0 down payment mortgage option available to Veterans, Service Members and select military spouses. VA loans are issued by private lenders and guaranteed by the U.S. Department of Veterans Affairs (VA).
The VA home loan was created in 1944 by the United States government to help returning service members purchase homes without needing a down payment or excellent credit. This historic benefit program has guaranteed more than 22 million VA loans to help veterans, active duty military members and their families purchase homes or refinance their mortgages.
Today, the VA mortgage is more important than ever. In recent years, lenders nationwide have tightened their lending requirements in the wake of the housing market collapse, making the VA loan a lifeline for Veterans and active Military homebuyers, many of whom find difficulty when faced with tough credit standards and down payment requirements.
VA Loan vs. Traditional Mortgages
Military homebuyers have access to one of the most unique and powerful loan programs ever created. See how the VA Loan compares to a traditional home mortgage:
|VA Loans||Conventional Loans|
|0% Down(for qualified borrowers)VA Loans are among the last 0% down home loans available on the market today.||Up to 20% DownConventional loans generally require down payments that can reach up to 20% to secure a home loan, pushing them out of reach for many homebuyers.|
|No PMISince VA Loans are government backed, banks do not require you to buy Private Mortgage Insurance.||PMI RequiredPrivate Mortgage Insurance is a requirement for borrowers who finance more than 80% of their home’s value, tacking on additional monthly expenses.|
|Competitive Interest RatesThe VA guaranty gives lenders a greater degree of safety and flexibility, which typically means a more competitive rate than non-VA loans.||Increased Risk for LendersWithout government backing, banks are taking on more risk which, in turn, can result in a less-competitive interest rate on your home loan.|
|Easier to QualifyBecause the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA Loans, making them easier to obtain.||Standard Qualification ProceduresConventional options hold stricter qualification procedures that can put homeownership out of reach for some homebuyers.|
Regulations and Fees
Although the VA Loan is a federal program, the government generally does not make direct loans to veterans. Instead, private lenders including Veterans United Home Loans finance the loan while the Department of Veterans Affairs offers a guaranty.
This guaranty, which protects the lender against total loss should the buyer default, provides incentive for private lenders to offer loans with better terms.
In most parts of the country, veterans who qualify for the VA Loan can purchase a home worth up to $453,100 without putting any money down; however, with the 2017 VA Loan Limits, borrowers in high-cost counties may be able to purchase homes far exceeding that amount without a down payment.
The VA Funding Fee goes directly to the VA to ensure the program keeps running for future generations of military homebuyers by removing any additional burdens off tax payers and veterans. The fee varies depending on the borrower’s circumstances and does not apply for veterans with service-connected disabilities. For example, if this is your first time using the VA Home Loan Program, the funding fee is typically 2.15 percent of the purchase price of the home. For subsequent use of your VA Loan benefit, the fee is 3.3 percent.
VA borrowers can roll the funding fee into their overall loan amount. The VA also limits closing costs for veterans and allows sellers to pay most or all of those expenses. Many of our borrowers purchase a home with no money due at closing.
How Do You Get a VA loan?
A lender must be approved by the U.S. Veterans Administration in order to help you get an VA loan. You can shop for mortgage quotes for an VA loan quickly and easily on Clifton Saunders Mortgage Team. Our Purchase Assistants will help narrow down options based on your individual needs. It’s quick, it’s easy, and the more questions you answer – the more accurate your results. You’ll receive the Purchase information you need instantly without all the calls and emails.