Have you heard of VA loans? Backed by the United States Department of Veterans Affairs (VA), they are designed specifically for military veterans. Whether you served in the Air Force, Navy, Army or Coast Guard, you may be eligible for a VA loan. To better understand VA home loans and how they work, keep reading.
Overview of VA Home Loans
VA home loans, also known simply as VA loans, are mortgage loans guaranteed by the VA. Unlike most mortgage loans, they aren’t available to all citizens. Rather, only veterans, as well as active military service members and reservists, are eligible for a VA home loan. Using a VA home loan, veterans can purchase a home, condominium or multi-unit property.
It’s important to note that the VA doesn’t necessarily offer VA home loans. The VA simply creates the standards for VA home loans and guarantees them. If you’re interested in a VA home loan, you’ll have to apply for one at a traditional bank.
VA Home Loan Benefits
Why should you use a VA home loan rather than a traditional mortgage to purchase a home? Being that they are backed by the VA, VA home loans offer several benefits, one of which is no down payment. After the real estate crash of 2007, banks became increasingly cautious when approving mortgages. Unless an applicant placed at least 10% to 20% down, he or she probably wouldn’t get approved. With a VA home loan, however, you don’t have to make a down payment. Statistics show about 90% of VA home loan borrowers don’t place any money down.
According to Wikipedia, VA home loans offer up to 103.3% financing — all without the use of private mortgage insurance (PMI). In other words, if you want to purchase a $100,000 home, you may eligible for a VA home loan of $103,300, which is more than the actual cost of the home.
What Are the Requirements for a VA Home Loan?
Not everyone is eligible for a VA home loan. As previously mentioned, only veterans, active military service members and reservists are eligible for them. Furthermore, there are different eligibility requirements based on the specific wartime service. For Gulf War, for instance, you must have served for at least 24 continuous months active duty. For the Vietnam War, you must have served for at least 90 days active duty.
Check out the VA’s official website here for more information about VA home loans and their requirements.
