VA Home Loans
Active service members, veterans, and select military spouses have access to a powerful lending program that can help them become homeowners: VA home loans. These flexible, no–down payment loans have some of the lowest average interest rates on the market. You can see why it’s so important service members and their families know about them!
To qualify for a VA loan, you will need to meet one of the following criteria:
- Served for 181 consecutive days of active service during peacetime
- Served for 90 consecutive days of active service during wartime
- Served less than 90 consecutive days of active service if discharged for a service-related disability
- Have more than six years in the Reserves or National Guard
- An active-duty service person
- A reservist or member of the National Guard
- A spouse of someone meeting one of the above criteria
The process of applying for and receiving a VA home loan is similar to obtaining a regular mortgage.
- Get prequalified from a VA lender. The US Department of Veterans Affairs isn’t actually the one lending the money, so you’ll need to find a credit union who accepts the guarantee of the VA to offer VA loans. Prequalification will show you how much you can expect to borrow based on your income, credit, entitlement, and other financial factors.
- Get preapproved for the loan and a preapproval letter. Being preapproved—and not just prequalified—will give you the power to jump on the perfect home as soon as you find it and put in an offer. The letter shows real estate agents and home sellers you’re a strong and serious buyer.
- Put in an offer on a VA-approved home. Craft an offer with your real estate agent and negotiate a contract with the seller.
- Once you’re under contract, the lender will order a VA appraisal of the property. Underwriters will evaluate your income, financial and related documents, and the appraisal. If all is well, you’ll be issued a clear to close on the loan.
Things to know
- You can reuse your full VA entitlement over and over as long as you pay off the loan each time. You may be able to get another VA loan if you’ve lost one to foreclosure or currently have an active loan.
- Only move-in ready homes qualify for VA loans, including single-family homes, condos, modular housing, and some multi-unit properties. Working farms, commercial or mixed-use properties, and fixer-uppers usually won’t qualify.
- VA loans are for primary residences, not vacation or income properties, but you may be able to use the loan to buy a multiunit property if you live in one of the units.
- The VA doesn’t issue or originate the loans. Instead, the VA provides a guarantee on each qualified loan, up to a quarter of the full amount, which lowers the risk to lenders and allows them to offer service members great terms and rates.
- The VA guarantee means you don’t have to pay for mortgage insurance if you don’t put at least 20 percent down at closing.
- The guarantee also means less stringent qualification standards for VA loans, including higher debt-to-income (DTI) ratios accepted by lenders.
- There is a VA funding fee for both purchase and refinance loans. The fee can be rolled into the loan or waived for those with service-related disabilities and typically ranges from 2.15 to 3.3 percent of the home’s purchase price.
- VA loans don’t have a prepayment penalty. You can make extra payments any time to save interest over the life of the loan.
- VA loans are available with the same terms as conventional mortgages, typically ranging from 10 to 30 years, and can come with either fixed- or adjustable-rate interest. Loan options depend on the lender.
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- The seller can pay for up to four percent of the purchase price in closing costs, whereas with closing costs in conventional mortgages, the seller can only pay up to three percent if your down payment is less than 10 percent.