What is a VA-Guaranteed Loan?

VA loans are not lent by, but guaranteed or insured by the U.S. Department of Veterans Affairs (VA). They are a part of the benefits laid forth by the 1944 G.I. Bill of Rights, and were instituted to provide affordable, comfortable housing with low maintenance terms to our servicemen and women and their families.   

Using a VA loan, eligible military personnel and veterans may:

        
  • Buy a home, either existing or pre-construction, as a primary residence
  • Refinance an existing loan

What are the types of VA refinances?

Refinancing is commonly done via a:

        
  • Streamline, also called Interest Rate Reduction Refinance Loan (VA IRRRL) or
  • VA Cash-Out refinance

Streamline refinances allow veterans with existing VA loans to modify their terms and lower their rate without a home appraisal and less paperwork than required by a typical refinance. VA Cash-Out refinances allow veterans to refinance into a VA loan if they did not already have one, as well as refinance their existing VA loan. The Cash-Out option allows them to both refinance and take cash out of their home equity, to be used for whatever they wish. 

What are the main VA loan benefits?

Remember that VA loans were created to help veterans transition into better housing, and so VA loans come with a range of benefits unheard of in other home financing programs:

             
  • Minimum qualifying credit of 560 (read more about credit requirements)
  • Equal opportunity for all qualified veterans to obtain a VA loan
  • No down payment (read more about zero down payment)
  • No mortgage insurance
  • One time VA funding fee that can be included in the loan
  • Veterans receiving VA disability compensation are exempt from the VA funding fee, typically 2.15%-2.4% for eligible borrowers using the no down payment option
  • VA limits certain closing costs a veteran can pay
  • Can be transferred to qualified persons; the loan is assumable
  • Minimum property requirements to ensure the property is safe, sanitary, and sound
  • VA staff dedicated to assisting veterans who become delinquent on their loan
  • Reusable: you may receive more than one VA loan, just not at the same time 

Read our list of VA Myths and the facts behind them here.

Who is eligible for a VA loan?

Generally, the following people are eligible: 

        
  • Veterans who meet length of service requirements
  • Service members on active duty who have served a minimum period
  • Certain Reservists and National Guard members
  • Certain surviving spouses of deceased Veterans

Note: There are other groups of individuals who may be eligible. To determine your eligibility, check eBenefits at www.ebenefits.va.gov, or contact VA Eligibility Center at 1-888-768-2132.

Read about the VA loan limits for each state.

 Main VA loan takeaways:

        
  • You don't have to be a first-time homebuyer!
  • You can reuse the benefit!
  • VA-backed loans are assumable, if the person assuming the loan qualifies!

Still have questions? 

Read our VA FAQ here, or call today to speak with one of our VA Loan Experts!

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