A VA Loan is a mortgage loan guaranteed by the United States Department of Veterans Affairs (VA). It’s designed to assist eligible veterans, service members and their surviving spouses in buying, building, improving or refinancing their home. These loans offer benefits like no downpayment (depending on the homes appraised value), no private mortgage insurance (PMI) and potentially lower interest rates than conventional loans.
VA Loans can allow for 100% financing, meaning no downpayment is required, as long as the sales price doesn’t exceed the properties value.
Unlike conventional loans, VA loans don’t require private mortgage insurance (PMI) which can save money in the long run.
While interest rates are negotiated and can vary, VA Loans often offer competitive interest rates.
VA Loans may have more flexible underwriting guidelines compared to conventional loans, potentially making it easier to qualify.
VA Loans have no early payment penalties. You won’t be penalized for paying off your loan early.
VA Funding Fee – A funding fee is typically required, but there are exemptions for certain individuals, including those with service-connected disabilities.
Lender Fees – Be aware of potential lender fees which may include a loan origination fee. Shop around to find the best rate and fees.
To be eligible for a VA Loan, you generally need to have served at least 90 days and been discharged under other than dishonorable conditions or meet specific service requirements.
You’ll need a Certificate of Eligibility (COE) from the VA to demonstrate your eligibility for a VA Loan.
VA Loan Types
- VA-Backed Purchase Loan: Used to purchase a home, including single-family homes, condos in VA approved projects and homes with improvements.
- Interest Rate Reduction Refinance Loan (IRRRL): Can be used to refinance an existing VA or non-VA loan.
- VA Direct Loan: A direct loan from the VA. More commonly, VA loans are provided by private lenders who are guaranteed by the VA.
VA Loan Limits
- No Loan Limits with Full Entitlement: Veterans with full entitlement (meaning they haven’t used their VA loan benefit or have had it fully restored) can borrow up to the maximum amount without needing to pay a downpayment.
- County Loan Limits: There are county loan limits for veterans who have previously used their VA home loan entitlement and haven’t had it restored.
- Fannie May/Freddie Mac Limits: In most areas, VA loans can borrow up to the Fannie Mae/Freddie Mac conforming loan limit.
VA Loans can be up to $726,000.00 average Limit.
VA Loans require DD-214 Discharge Form.
You can qualify for multiple based on entitlement.