VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
VA Home Loans
What is a VA Home Loan?
Other Benefits of a VA Loan
- Negotiable – typically lowest interest rates
- Closing costs are comparable and sometimes lower – than other financing types
- No private mortgage insurance requirement
- Right to prepay loan without penalties
- The mortgage can be taken over (or assumed) by the buyer when a home is sold, under certain circumstances
- Counseling and assistance are available to veteran borrowers having financial difficulty
- 100% financing available for primary residence home purchases
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy-efficient improvements approved by the lender and VA.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.