Veteran or Active Duty and using a VA Home Loan?
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What is the
VA Loan?
Who is Eligible for
a VA Loan?
How are VA Loan
Rates Determined?
How do I Qualify
for a Low Rate?
Why use a
VA Loan?
How Much can
I Borrow?
 

What is the VA Loan?

The VA Loan is a mortgage lending option offered specially for active military service members and veterans. Backed by the Department of Veterans Affairs, VA mortgage lenders are able to offer home loans with the most flexible financing options in the industry. Qualified borrowers are not required to make a down payment or pay private mortgage insurance, making the VA home loan the most cost-effective and money-saving option when it comes to moving your family into a new home.

History of the VA Loan

The VA Home Loan Guaranty Program was established in 1944 to aid Veterans returning from war. The goal of VA Home Loan Benefits was to help Veterans purchase or refinance a home in gratitude for the sacrifices they made by serving our country. The VA Mortgage benefit was introduced as part of the Servicemen's Readjustment Act, commonly known as the G.I. Bill, which also provided various educational and employment benefits for U.S. Veterans.

Who is Eligible for a VA Loan?

There are several eligibility requirements you must meet to qualify for a VA Mortgage. If you are not sure if you will qualify, you should speak with a mortgage broker or a VA Loan Specialist. One of the first steps toward getting a VA Loan is to complete a Certificate of Eligibility.

You may be eligible for a VA Loan if any of these describe you:

  • Active-duty Veterans discharged during WWII or later, without the status of "dishonorable"
  • Active-duty Veterans with at least 90 consecutive days of service during major conflict
  • Peacetime Veterans and active-duty personnel with at least 180 days of consecutive service
  • Enlisted Veterans (service began after 1980), or officers (service began after 1981, and have served at least 2 years).

National Guard and selected Reserve members may also qualify. Check your eligibility with a qualified VA Loan Specialist if you have any questions.

How are VA Loan Rates Determined?

Every military homeowner who finances their home with a VA loan gets a certain interest rate, as they would with any type of loan. Your interest rate is determined by the amount of risk assumed by the lender. So borrowers with outstanding credit will get a better interest rate than a borrower whose credit is mediocre.

However, VA Loans reduce the risk for lenders even when a borrower's credit isn't perfect. Every VA Loan comes with a guarantee from the Department of Veterans Affairs for up to 25 percent of the loan amount. Because of that guarantee, lenders know that at least that amount will be covered in the unlikely case that a homeowner defaults, meaning the lender takes on less risk. This is why using a VA Loan to finance a home usually equates to getting a better interest rate compared to other programs.

How do I Qualify for a Low rate?

At Veteran Loan Center, we pride ourselves in offering competitive interest rates for our borrowers. In fact, we offer some of the most competitive VA rates around. One point to keep in mind, however, is qualifying for a low rate is dependent upon your financial situation

The rate you receive may very well differ from the interest rate offered to a different borrower. This is due to a number of things, such as your credit, the VA Loan type and the housing market.

Here are some tips to getting a lower interest rate.

  • Improve your credit. Start by checking your credit report and start paying down some of your debts. You may also check to make sure there aren't any fraudulent charges.
  • Timing. Interest rates tend to fluctuate, but by watching the market carefully, you can lock in your loan at a great rate.
  • VA approved lenders like to see prospective buyers will be able to make monthly payments in addition to other expenses. Good Savings reserves will allow lenders to offer a lower rate.

Why use a VA Loan?

In general, financing your home with a VA home loan is statistically more affordable than a conventional loan. If you qualify, you can count on competitive interest rates without the burden of excessive down payments or private mortgage insurance. Every day, more and more military families are taking of this unique federal benefit to move their families into new homes with the greatest cost efficiency.

What Can I do with the VA Loan

You can use your VA Loan to purchase a house, condominium or townhouse, as long as the dwelling will be your primary residence. You can also build a home, make energy-efficient home improvements or refinance your mortgage under various parts of the VA Loan program. The loan cannot be used for vacation homes, certain commercial property or to purchase land.

How Much can I Borrow?

The VA does not put a cap on how much money you can borrow. This is determined by the lender, typically a bank, savings and loans, or mortgage company. The basic entitlement of a VA Loan is $36,000, but some loans are eligible for $60,000 if they are over $144,000. A lender will often loan up to four times the amount of the basic entitlement without requiring a down payment.

Although there is no set maximum limit the VA allows you to borrow with your entitlement, most lenders and financial institutions will not approve a total of more than $417,000. However in some areas of the country the limit is higher.

Veterans who have already taken out a VA home loan in the past may be eligible for remaining entitlement for any unused previous balance. Because entitlement amounts have increased over time, many people with prior VA loans may be eligible for more money now than they were previously. Complete our form or call us today to find out if you qualify.
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