What is a VA Loan?

VA Loan Guidelines

The VA Loan became known in 1944 through the original Servicemen's Readjustment Act also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. The GI Bill contributed more than any other program in history to the welfare of veterans and their families, and to the growth of the nation's economy.

With more than 25.5 million veterans and service personnel eligible for VA financing, this loan is attractive and has many advantages. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program.

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

VA Guaranteed Home Loans for Veterans
VA Pamphlet 26-4:
The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is competitive with the rate charged on other type of mortgage loans. This pamphlet should help you to understand what the Department of Veterans Affairs can and cannot do for the veteran home purchaser.

A Quick Guide for Veteran Homeowners and Real Estate Professionals
VA Pamphlet 26-6:
This pamphlet is designed to help veterans planning to purchase or construct homes, particularly those veterans who intend to finance with a VA construction loan. It does not try to discuss the arguments for or against homeownership. It is up to each veteran to decide whether homeownership is best for his or her family.

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home which must be for their own personal occupancy. To to use this VA benefit, a veteran must apply to a lender.

Here's how it works:

• 100% financing without private mortgage insurance or 20% second mortgage.
• A VA funding fee of 0 to 3.3% (this fee may be financed) of the loan amount is paid to the VA.
• When purchasing a home, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less.
• When refinancing a home, veterans may borrow up to 90% of reasonable value in order to refinance where state law allows.

Apply for a VA Loan with a VA Qualified Lender.