As a reward for the bravery and risk that many military personnel and their families take on, the government (and some businesses) offers a number of helpful policies for veterans.

One of these is the ability to get Veterans Affairs loans, also known as VA loans. Let’s find out more about VA loans below.

What Is A VA Loan?

A VA loan is a type of mortgage loan made available by the United States Department of Veterans Affairs (VA) (previously the Veterans Administration). VA assists qualifying Servicemembers, Veterans, and surviving spouses to make owning a home easier and more affordable.

Veterans, service members, and surviving spouses can use VA loans to purchase homes with little or no down payment, no private mortgage insurance (PMI), and a reasonable interest rate. Veterans, Service Members, and certain military spouses are eligible for a VA loan with no down payment.

VA loans are made by private lenders, such as mortgage companies or banks, and are insured by the U.S. Department of Veterans Affairs (VA). Because the VA guarantees a portion of the loan, the lender can offer you better terms on a loan than with a traditional mortgage.

Veterans Affairs (VA) loans, Federal Housing Administration (FHA) loans, and other government-insured loans are securitized by the Government National Mortgage Association (GNMA), popularly known as Ginnie Mae. These securities are backed by the US government’s guarantee against default.

The United States Department of Veterans Affairs guarantees a share of all VA home loans, which eliminates the need for borrowers to make a down payment or pay private mortgage insurance (PMI).

A VA loan is only available if you are purchasing a primary residence. It cannot be used to purchase a vacation house or investment property. However, you can use it to build a home, modify a property, or make a home more accessible if you have service-related disabilities. 

Additionally, you may use your VA loan benefits multiple times during your lifetime. The VA offers various different types of mortgage loans. These include the following:

Home Purchase Loans

Veterans and service members can use the VA loan to finance the purchase of new or existing houses with no down payment required. Veterans may also use VA purchase loans to acquire single-family homes, condominiums, mobile homes, multi-unit properties (such as duplexes), and even new construction.

VA Cash-Out Refinance

Cash-out refinances loans enable homeowners to borrow against their home equity in order to consolidate debt, fund education, or make home upgrades. This type of refinancing provides a new mortgage that is larger than the previous note and converts home equity to cash. Typically, qualified homeowners can refinance up to 90% of the value of their house.

VA Interest Rate Reduction Refinance Loan

Interest rate reduction refinances loans (IRRRLs), also known as VA streamline refinance loans, enable borrowers to refinance an existing VA loan at a lower interest rate. This is a VA-to-VA loan conversion process that enables homeowners with an existing VA loan to refinance a fixed-rate loan or convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage at a cheaper interest rate.

VA Energy Efficient Mortgage

Veterans can borrow additional money from the VA to pay for energy efficiency improvements to their homes as part of a home purchase or refinance.

Veterans may finance up to an additional $6,000 for eligible renovations like a storm or thermal windows, heat pumps, and solar heating and cooling systems. This option is not available to homeowners for the purchase of appliances, window air conditioning units, or other non-permanent additions.

VA Native American Direct Loan

The Native American Direct Loan program assists qualified Native American veterans in acquiring, constructing, or improving homes on federal trust land. These loans also come with interest rate reductions.

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