The VA home loan: Unbeatable benefits for veterans
For many who qualify, a VA loan is the best mortgage option available.
Backed by the U.S. Department of Veterans Affairs, VA loans are designed to help active-duty military personnel, veterans and certain other groups become homeowners at an affordable cost.
The VA loan asks for no down payment, requires no mortgage insurance, and has lenient rules about qualifying, among many other advantages.
Here’s everything you need to know about qualifying for and using a VA loan.
Verify your VA loan eligibility. Start hereIn this article (Skip to...)
What is a VA loan?
A VA loan is a mortgage option provided by private lenders and partially guaranteed by the U.S. Department of Veterans Affairs. It’s available to eligible service members, veterans, and surviving spouses.
Compare VA loan offers from multiple lenders. Start hereKey features include:
- No required down payment
- No private mortgage insurance (PMI)
- Competitive interest rates
The VA home loan can also help existing homeowners refinance into a lower interest rate or cash-out home equity.
How does a VA loan work?
VA loans are backed by the Department of Veterans Affairs. The government, however, doesn’t issue funds — it only guarantees the loans. This insurance provides extra security for lenders, which allows them to offer veterans more flexibility with VA loan requirements.
To get a VA loan, you must contact a private lender that’s approved to offer this program. They will verify your eligibility for a VA loan, look at your personal finances, and tell you how much you’re able to borrow, as well as your mortgage rate.
VA loan benefits
There are many benefits of a VA loan, especially for active-duty service members, veterans, and their families. Whether you’re a first-time home buyer or looking to refinance, the VA loan program can help you achieve your homeownership goals with more flexible and favorable terms than conventional loans.
Verify your VA loan eligibility. Start hereHere are the eight key benefits of a VA home loan.
1. No down payment
One of the most well-known benefits of VA loans is the ability to purchase a new home without needing a down payment. Rather than paying 5%, 10%, 20% or more of the home’s purchase price upfront in cash, with a VA loan you can finance up to 100% of the purchase price.
2. No mortgage insurance
Typically, lenders require you to pay for mortgage insurance if you make a down payment that’s less than 20%. This insurance — which is known as private mortgage insurance (PMI) for a conventional loan and a mortgage insurance premium (MIP) for an FHA loan — would protect the lender if you defaulted on your loan.
VA loans require neither a down payment nor mortgage insurance. That makes a VA-backed mortgage very affordable for first-time home buyers.
3. Lower interest rates
One of the key VA loan benefits is lower interest rates compared to other loan options. Since VA home loans are backed by the U.S. Department of Veterans Affairs, lenders are able to offer more competitive interest rates, which result in lower monthly mortgage payments.
This is one of the most appealing VA home loan benefits because even a slight reduction in the interest rate can save you thousands of dollars over the life of your loan.
4. Government insured
There’s a reason why the VA loan comes with such favorable terms. The federal government guarantees these loans — meaning a portion of the loan amount will be repaid to the lender even if you’re unable to make monthly payments for whatever reason.
This guarantee encourages and enables private lenders to offer VA home loans with exceptionally attractive terms.
Verify your VA loan eligibility. Start here5. Relaxed loan requirements
One of the more flexible benefits of VA loans is the relaxed eligibility requirements.
Like all mortgage loans, VA loans require specific documentation, an acceptable credit history, and sufficient income to make your monthly payments. But, compared to other loan programs, VA home loan requirements tend to be more flexible. This is made possible because of the VA loan guaranty.
6. Lower closing costs
Another of the major benefits of a VA home loan is that closing costs tend to be much lower than conventional loans.
The VA limits the closing costs lenders can charge to VA loan applicants, which often results in lower borrowing costs. This is another way that a VA home loans can be more affordable than other types of loans.
7. No prepayment penalty
One of the lesser-known but valuable VA home loan benefits is that there are no prepayment penalties. This means you can pay your mortgage early without incurring any additional fees, which can save a lot of money in interest over the life of the loan.
8. VA loans are assumable
Most VA loans are “assumable,” which means you can transfer your VA loan to a future home buyer if that person is also VA-eligible.
Assumable loans can be a huge benefit when you sell your home, especially in a rising mortgage rate environment. If your current mortgage loan has a lower interest rate and market rates rise in the future, the assumption feature becomes a valuable VA loan benefit.
Who qualifies for a VA loan?
To qualify for a VA loan, you must meet specific service requirements set by the Department of Veterans Affairs. These requirements vary depending on your military service, and in some cases, surviving spouses may also be eligible for the VA loan program.
Compare VA loan offers from multiple lenders. Start hereLet’s explore the details of who qualifies for a VA loan.
Military service requirements
VA home loans are available to active-duty service members, qualified veterans (unless dishonorably discharged), and in some cases, surviving spouses.
To be eligible, you need to meet one of these service requirements:
- You’ve served 181 days of active duty during peacetime
- You’ve served 90 days of active duty during wartime
- You’ve served six years in the Reserves or National Guard
- Your spouse was killed in the line of duty and you have not remarried
Your eligibility for a VA loan never expires. Qualified veterans who earned their VA entitlement long ago are still using their benefit to buy homes.
Certificate of Eligibility
In order to show a mortgage company your eligibility for a VA loan, you’ll need a Certificate of Eligibility (COE). Your lender can acquire one for you online, usually in a matter of seconds. Simply have your lender order the COE through the VA’s automated system. Any VA-approved lender can do this.
Alternatively, you can order your certificate yourself through the VA benefits portal. If the online system is unable to issue your COE, you’ll need to provide your DD-214 form to your lender or the VA.
VA home loan benefits for surviving spouses
What if the service member passes away before he or she uses the benefit? In many cases, the entitlement passes to an unremarried spouse.
For the surviving spouse to be eligible, the deceased service member must have:
- Died in the line of duty
- Passed away as a result of a service-connected disability
- Been missing in action, or a prisoner of war, for at least 90 consecutive days
- Been a totally disabled veteran for at least 10 years prior to death, and died from any cause
Also eligible are remarried spouses who married after the age of 57, on or after December 16, 2003. In these cases, the surviving spouse can use VA loan eligibility to buy a home with zero down payment, just as the veteran would have.
Surviving spouses also have an additional VA loan benefit. They are exempt from the VA funding fee. But more on that later.
Types of VA home loans
The VA loan program offers several options tailored to the needs of service members, veterans, and their families. Here are the main loan types:
Compare VA loan offers from multiple lenders. Start here- VA home purchase loan: Helps eligible borrowers buy a primary residence with no down payment.
- VA cash-out refinance: Allows homeowners to tap into home equity by refinancing and taking cash out.
- VA Streamline Refinance (IRRRL): The Interest Rate Reduction Refinance Loan (IRRRL) simplifies the refinancing process to secure a lower interest rate or reduce monthly payments.
- VA renovation loan: Finances both the purchase and renovation of a home.
- NADL program: Provides Native American veterans the opportunity to buy, build, or improve homes on federal trust land.
Each of these options offers unique advantages, allowing VA loan borrowers to find the right fit for their home buying or refinancing needs.
How to apply for a VA Loan
Applying for a VA home loan involves several steps to ensure you’re eligible and ready to purchase your new home. Here’s how to qualify for a VA loan.
Begin your VA loan application. Start here- Request your Certificate of Eligibility (COE): Your COE confirms your eligibility for a VA loan. You can request it online, through a VA lender, or directly from the VA.
- Get preapproved for a VA home loan: Before you start house hunting, get preapproved by a VA lender to determine your loan amount and strengthen your offers.
- Find your new home: Work with a real estate agent to find a home that meets your needs and qualifies for a VA loan.
- Make an offer on the property: Submit an offer with your preapproval in hand, showing sellers you’re a serious buyer.
- Complete VA home appraisal and loan underwriting: The VA will conduct a home appraisal to ensure the property’s value and condition, and your lender will complete underwriting.
- Close your VA home loan: Once approved, you’ll sign the final documents and officially become a homeowner.
FAQ: VA loan
Compare VA loan offers from multiple lenders. Start hereYes, you can get a VA loan without being in the military if you are a qualifying surviving spouse. This benefit extends to those whose spouses died in service or due to a service-connected disability.
No, having a Certificate of Eligibility (COE) doesn’t guarantee a VA loan approval. Your COE shows the lender you’re eligible for a VA loan, but you must still qualify for the loan based on VA mortgage guidelines. The guarantee part of the VA home loan refers to the VA’s promise to the lender of repayment if the borrower defaults.
Yes, you can qualify for a VA loan if you have a part-time job or multiple jobs. You must show a 2-year history of making consistent part-time income and stability in the number of hours worked.
Yes, you can have two VA loans at one time if you have enough remaining entitlement and meet the lender’s requirements. This usually happens when you move to a new primary residence but still own a home financed with a VA home loan.
Yes, you can buy a condo with a VA loan, but the condo must be in a VA-approved development. You can check the VA’s database to see if the condo is eligible before applying.
Yes, a non-veteran can assume a VA loan, but they must meet the lender’s qualification requirements. This can be a great option if the original loan has a lower interest rate than current market rates.
The VA guaranty is the VA’s promise to repay a portion of the loan to the lender if the borrower defaults. This guaranty helps veterans and service members get more favorable loan terms, like lower interest rates and no down payment.
Ready to claim your VA loan benefits?
If you’re ready to take advantage of the incredible benefits a VA loan offers, now is the time to act.
Whether you’re buying a new home, refinancing, or looking to access your home equity, the process is simple and starts with just a few clicks. Don’t wait—claim your VA home loan benefits and begin your journey to homeownership!
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