VA Loans Make Homes Reachable for Veterans

Lenders make a special type of home loan available which is guaranteed to veterans of the US Armed Services by the Veterans Administration (VA). This warranty protects the lender's investment should the borrower default making this program attractive to all.

Are You are Eligible for a VA Loan?

Listed below are most of the various qualifications options for eligibility for this benefit offered by the VA. Wartime veterans who served a minimum of 90 days and were not dishonorably discharged are eligible. Veterans who served during peace time need to have at least 181 days if they served prior to Sept 7, 1980 or at least two years after that date and be honorably discharged. Those serving in the Reserves and National Guard for at least six years and are still serving or have been honorably discharged are also eligible. Surviving spouses of eligible persons who died as the result of service or service-related injuries and have not remarried may also be eligible. (Call or e-mail your local VA office for other questions regarding eligibility.)

Get a Certificate of Eligibility from the VA Before Applying for a Loan

In order to submit an application for a VA loan you must have a Certificate of Eligibility from the Veterans Administration. To get this, go the VA website and get: VA Form 26-1880. Fill it out and send it in along with your DD Form 214 providing evidence your service, if you served after 1979. This certificate does not guarantee the bank will approve your credit application, you must still qualify financially. Some veterans will be able to get an Automatic Certificate of Eligibility (ACE) through their lender via the internet, if the VA has entered sufficient information about the veteran in their database.

Limitations on VA Loans

VA home loans can only be used to finance your principal residence within the United States or its territories. VA loans can also be used for home refinances as well as some kinds of home improvements as long as you haven't borrowed the maximum amount allowed. You need to check on the maximum amount allowed in your area. The loan limit for 2008 is $417,000 ($625,500 for Hawaii, Alaska, Guam and U.S. Virgin Islands). Qualifying veterans can get a no down payment loan for those amounts. A funding fee of two percent of the loan amount or 2.75 percent for reservists must be paid when you close your VA loan. You may want to include this fee in the loan. If you can make a down payment of at least five percent, this fee will be reduced.

VA Loan Benefits

Normally, veterans can get a loan for the entire purchase price of the home with no down payment needed. Since VA loans are guaranteed no Private Mortgage Insurance (PMI) is required which can be a huge monthly savings depending on the amount of the loan. There are no penalties if you pay ahead on the loan. You will find competitive interest rates are available as well. In addition, qualifying for a loan may be slightly less difficult than obtaining conventional loan. Lenders who offer FHA loans, usually also give VA loans.

The Downside of a VA Loan

Until recently, VA loans took longer to obtain, so sellers may be hesitant to accept an offer knowing it is tied to a VA loan. However, you can reassure sellers that getting a VA loan today takes only a little longer than a conventional loans. Be aware that sellers are sometimes asked to pay a portion of closing costs, so take this into account when negotiating the sales price of the home. The guaranteed maximum VA loan permitted may not make this loan feasible in your housing market if the homes have high values.

If you qualify as a veteran and for the loan, a VA loan may enable you obtain the house of your dreams.