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VA Home Loan Overview


VA Home Loans are offered for a variety of different people. Some of the types of people that qualify are veterans, active duty personnel, some specific National Guard and reservist service members. Surviving spouses of persons who die on active duty or as a result of disabilities connected with service are also eligible. In some cases spouses of active duty service members who are forcibly detained by a foreign government, captured in the line of duty, or missing in action may also be eligible.

The way a VA loan works is pretty simple. To get a VA loan you have to get a loan through a private lender. After you do that, the VA essentially "stands behind" the loan. This assures the lender that if you can no longer make payments or something goes wrong, they can ask the VA to cover any losses they might have. In other words, the loan guaranty provided by the VA is a form of insurance provided to the lender to make them more inclined to give out a loan. Almost all of the loans are handled by lenders and the VA is rarely involved in the whole loan approval process.

There are some pretty distinct advantages to taking advantage of a VA loan. With a VA loan you must still qualify for the loan you are seeking in terms of credit and income, but in many cases you can buy a home without having to make a down payment. This takes away a lot of the difficulty of buying a home as many people have to save for years just to be able to afford their down payment. To get the loan without a down payment, you have to make sure that the value of the home is greater than or equal to the sales price. In addition to this, because of the insurance provided by the VA, you do not have to buy private mortgage insurance when purchasing a home. There is also a limit, imposed by VA rules, to the amount of money you can be charged for closing costs. Keep in mind that closing costs may be paid by the seller, and you should take this into account when negotiating the sales price of a home. Another big advantage to a VA loan is that the lender cannot charge you a penalty if you pay the loan off early, and in some cases the VA may provide you with some assistance if you have difficulty making payments.

To get a VA loan you do not have to be a first time home buyer. In addition, keep in mind that you can reuse the benefit any time you are purchasing a home. Also, as long as the person assuming a loan qualifies, VA loans are themselves assumable.

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