What Is a VA Loan?
VA loans are home loans for the purchase of a primary residence available to consumers who have served or are presently serving in the U.S. military.
While the Department of Veterans Affairs (VA) does not lend money for VA loans, it backs loans made by private lenders (banks, savings and loans, or mortgage companies) to veterans who qualify.
Who Is Eligible for a VA Loan?
- Active-duty personnel
- Reservists/National Guard members
- Some surviving spouses
What Are the Benefits of a VA Loan?
There are many, as taken directly from the Veterans Affairs site:
- No down payment required (unless required by the lender or the purchase price is more than the reasonable value of the property).
- Buyer informed of reasonable value.
- Negotiable interest rate.
- Ability to finance the VA funding fee (plus reduced funding fees with a down payment of at least 5 percent and exemption for veterans receiving VA compensation).
- Closing costs are comparable with other financing types (and may be lower).
- No mortgage insurance premiums.
- An assumable mortgage.
- Right to prepay without penalty.
- For homes inspected by VA during construction, a warranty from builder and assistance from VA to obtain cooperation of builder.
- VA assistance to veteran borrowers in default due to temporary financial difficulty.