Although most people have heard about VA loans, there are many who do not understand what it is all about.
Here we will address the common questions and answers about VA loans.
What is a VA loan and who can obtain it?
A VA loan is a special direct home loan program that is issued by approved lenders, but guaranteed by the federal government (U.S. Department of Veteran Affairs). It is designed especially for veterans or eligible spouses.
How do I prove VA loan eligibility?
The VA issues a Certificate of Eligibility which is a formal VA document that certifies a military member’s entitlement for a VA loan. This is the only way to determine a veteran’s eligibility and entitlement.
Does the VA control the mortgage rates for VA loans?
The VA does not control the mortgage rates for VA loans. VA mortgage rates are set by the banks that buy and sell mortgages. Because of this, VA rates can be different and competitive from lender to lender.
Does a VA loan have a maximum loan amount?
The VA does not set a maximum loan amount on how much can be borrowed to finance a home. However, there are limits on the amount of liability the VA can assume. The loan limits are the amount that an eligible borrower with full entitlement can borrow without the need for a down payment. The limits vary by county and depend on the location of the property.
What is the required down payment for a VA loan?
A VA loan does not require a down payment when purchasing a home in most cases. It is the only loan program that offers 100% financing to eligible borrowers.
Will I have to pay private mortgage insurance with a VA loan?
One of the benefits of a VA loan is that, even with 100% financing, you are not required to pay monthly private mortgage insurance.
What is a VA funding fee?
VA loans require a VA funding fee as part of the mortgage. This fee reduces the loan’s cost to taxpayers since VA loans do not require a down payment or monthly mortgage insurance. The funding fee is a percentage of the loan amount and varies based on the type of loan, military category, first time or subsequent loan borrower, and whether a down payment is made. The funding fee must be paid at closing, however, it can be financed with the VA loan. Certain eligible VA borrowers may be exempt from paying the VA funding fee.
What type of home can I purchase with a VA loan?
A VA loan can be used to purchase a residential home, a townhouse or condominium that you plan to occupy. The residence can be an existing dwelling or newly built.
What else can I use a VA loan for?
A VA loan can be used for refinancing an existing loan. The current mortgage can be a VA mortgage or another type of mortgage. VA loans can also be used to make qualified home improvements, such as insulation and other repairs with energy efficient features.
Can I refinance a VA loan?
Yes, a VA loan can be refinanced. The Interest Rate Reduction Refinance Loan (IRRRL) is a simple, no cash out refinance for an existing VA loan which requires a minimal amount of documentation. The VA refinance is a regular refinance that allows for cash out, as well as, refinancing a non VA loan to a VA loan.
Where can I get more information about VA loans?
VA loans are offered by approved lenders who can provide additional information. There is no need to physically visit a VA lender for more information since nationwide VA lenders are available online. A knowledgeable lender who specializes in VA loans will be able to answer your questions and provide you with the best competitive VA loan available.
My loan process was very easy and quick. Not to mention a great loan rate. I couldn't be happier!
Capt Sam T. - US Army
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