VA LOANS

What is a Veteran’s Administration (VA) Loan?

A VA loan, or VA mortgage loan, is guaranteed by the United States Department of Veteran Affairs (VA). The VA loan program is for veterans, active duty members of the U.S. military, reservists, and surviving spouses of veterans who have not remarried. The main goal of a VA loan is to put veterans into homes and to allow them to make a home purchase without a down payment.

Loan Scenario for a VA Loan

VA loans can only be used by veterans, active duty military, reservists and some spouses. VA loans can be used a for broad range of home purchases, including single-family homes, condos, multi-unit properties, new construction homes, and manufactured homes. A VA mortgage loan is an ideal option for qualified individuals looking to purchase a home without a down-payment or with a small down-payment or those looking to take equity out of their home.

Pros of a VA Loan

Here are the advantages of a VA mortgage:

• Can get a loan with no down payment
• No mortgage insurance regardless of down payment amount
• Can borrow up to 103.3% of the total loan value
• There is no hard rule on debt-to-income ratios (DTI)
• Disabled veterans do not pay funding fees
• VA loans allow for more cash out than a conventional loan

Challenges of a VA Loan

• Borrowers must pay a funding fee depending on the percentage of their down payment, how many times they have used a VA loan (first time users pay less), and their military designation (regular military pays less than reserves or National Guard on first time use)
• VA loan appraisals can be stricter than a conventional loan and can take longer complete