What Is a VA Loan? Exploring VA Loan Requirements
What Is a VA Loan?
A VA loan is a specific type of home loan that military members and veterans can get through the US Department of Veterans Affairs, often abbreviated as the VA. These loans can have very competitive interest rates and far less strict requirements than conventional loans or even FHA loans.
While the VA sets the requirements and the terms of the loan, they are financed by private lenders or mortgage companies like conventional loans. VA loans can help you with various stages of the home loan process. They can help your purchase a home, or with two different types of refinance loans: cash-out refinances and interest rate reduction refinances.
However, you can only get a VA loan on a primary residence that is in move-in ready condition. If you’re looking to buy an extreme fixer upper or a vacation home, you cannot use a VA loan and will have to use a conventional loan.
Who Can Qualify for a VA Loan?
Active service members, veterans, and surviving spouses of military members can qualify for Va loans. You’ll have to provide your lender with what’s known as a certificate of eligibility to prove to your lender that you qualify for a VA loan. You can obtain these certificates from the VA website.
What Are VA Loan Benefits?
There are a ton of benefits that come with VA loans. First of all, the standards of VA loans are often far less stringent than that of a conventional loan. You can often qualify if you have a lower credit score, or other credit report issues like bankruptcy or a foreclosure.
Unlike conventional loans, there’s no borrowing limit. You do not need to have a down payment and could put 0% down on your home if your lender allows it. While a conventional loan requires you to put down at least 3% and to pay private mortgage insurance with a down payment under 20%, VA loans have no PMI, and lower closing costs than other loans.
ConclusionA VA loan is a great home loan option if you have served in the military.
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