The U.S. Department of Veterans Affairs (VA) created the VA Home Loan Program in 1944 as part of the original G.I. Bill to help veterans, servicemembers, and their families achieve and retain homeownership. Since its creation, the VA Home Loan Program has helped millions of veterans, servicemembers, and military families become homeowners.
For many servicemembers and veterans, a VA home loan is one of the most affordable paths to homeownership. With benefits like no down payment, no private mortgage insurance (PMI), and competitive interest rates, it’s a mortgage option worth exploring.
TOPICS COVERED:
- How Does a VA Home Loan Work?
- VA Loan Types and Benefits
- VA Loan Eligibility Requirements
- How to Apply for a VA Home Loan
How a VA Home Loan Works
VA home loans are made possible by the U.S. Department of Veterans Affairs (VA). Essentially, the VA guarantees that a portion of the loan will be reimbursed in the event of a loss due to foreclosure. This enables lenders to offer more favorable loan terms because the VA-backed loan reduces risk for the lender.
There are different types of VA loans depending on your status and circumstances, and each comes with different terms. The most common is the standard Purchase Loan, but there are other options available as well.
VA Loan Types and Benefits
There are many benefits that may come with a VA home loan*, including:
- 0% down payment on primary residence purchases
- Competitive interest rates
- Limited closing costs
- No private mortgage insurance (PMI)
- Reuse of your VA loan benefit throughout your lifetime (conditions apply)
- Flexible credit requirements compared to many conventional mortgage options
These benefits can vary depending on the type of VA loan you’re using.
*Benefits are subject to VA eligibility requirements, lender underwriting and approval, occupancy requirements, property eligibility and appraisal standards, available entitlement, and other program conditions. Not all borrowers will qualify. Terms and conditions apply.
Purchase Loans
Purchase Loans are the most common type of VA home loan and are used to buy a primary residence. They offer competitive interest rates without requiring a down payment or private mortgage insurance (PMI).
Cash-Out Refinance Loans
Cash-Out Refinance Loans allow you to tap into your home equity to pay off debt, cover education expenses, or make home improvements.
Interest Rate Reduction Refinance Loan (IRRRL)
The Interest Rate Reduction Refinance Loan (IRRRL), often called a Streamline Refinance, allows eligible borrowers to refinance an existing VA loan.
One advantage of the IRRRL program is that the waiting period is often shorter than many traditional refinance options. To qualify, borrowers generally must make at least six on-time monthly payments and wait at least 210 days from the date the first payment was due on the existing loan.
VA Loan Eligibility Requirements
VA loan eligibility is generally based on two factors:
- Duty status and length of service
- Character of service
Let’s break these down one by one.
Duty Status and Length of Service
Eligibility is generally based on your length and type of military service. Many active-duty servicemembers, veterans, National Guard members, and Reservists qualify after meeting minimum service requirements. In some cases, veterans discharged due to a service-connected disability may qualify sooner. Certain surviving spouses may also be eligible. For complete eligibility requirements, visit VA.gov.
Character of Service
In most cases, veterans with Honorable or General discharges may qualify for VA home loan benefits. Veterans with Other Than Honorable, Bad Conduct, or Dishonorable discharges may need a discharge review or may not qualify depending on their circumstances. Contact the VA or visit VA.gov to learn about the review process
How To Apply For a VA Loan
Depending on the type of VA loan you’re applying for, you’ll typically need a Certificate of Eligibility (COE). You can obtain a COE through your lender, online through VA.gov, or by mail. You’ll need your DD-214 or Statement of Service available during the process.
Once you have your COE, you’ll need to find a VA-approved bank, credit union, or mortgage company. From there, you’ll compare rates, get preapproved, shop for a home, complete underwriting, and close on your loan.
Our team at Core Bank is passionate about helping veterans and servicemembers understand their home financing options. We can help you understand VA loan rates, VA home loan benefits, VA loan eligibility requirements, and more. Give us a call or stop by one of our locations and we’ll gladly walk you through your questions and options.
To Our Servicemembers and Veterans, Thank You For Your Service
We are grateful for the sacrifices made by the men and women who serve our country. If you’re considering buying a home, we’re here to help you explore your options and determine whether a VA home loan is the right fit for your goals.
Give our team a call anytime. We’d be happy to answer your questions and help guide you through the VA home loan process.
Homeownership Resources
At Core Bank, we want you to feel confident in whatever stage of homeownership you’re in. Whether you’re considering buying, getting ready to sell, or just upgrading your space, our mortgage team of professionals is ready to assist you.
