VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
Negotiable interest rate.
Closing costs comparable – and sometimes lower - than other financing types.
No private mortgage insurance requirement.
Right to prepay loan without penalties
Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.
Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.
Recent updates (added 9/08):
VA loans still allow "nothing down" and the seller can now pay all your closing costs.
The VA has increased the maximum loan limit to $417,000 with a provision for larger loans (VA Jumbo Loans).
More Veterans are now eligible under the new guidelines including Reservists and National Guard members.
There are no limits to the number of times you can reuse your VA eligibility, so if you have had a previous VA loan you can get another one.
Credit underwriting is now similar to FHA (more liberal and flexible).
The property appraisal process has been streamlined and is similar in process, timing and value to FHA or conventional appraisals.
VA interest rates are competitive and, in most cases, equal or better than conventional.
VA loans can be used for refinancing and, in many cases, are superior in program, rate and costs to FHA or conventional refinance loans.
VA Loans