Va Mortgage Loans Eligibility
Rose J. RegaladoWhat Is a VA Loan?
A VA loan is a mortgage loan available through a program established by the United States Department of Veterans Affairs (previously the Veterans Administration. The VA sets the qualifying standards, dictates the terms of the mortgages offered and guarantees a portion of the loan, but doesn’t actually offer the financing. VA home loans are provided by private lenders, such as banks and mortgage companies, instead.
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How a VA Loan Works
VA loans assist active service members, veterans, and surviving spouses to become homeowners. The individual presents a certificate of eligibility from the VA to the lender in the course of a loan application. Although some of the lender’s own underwriting requirements must still be met, in most cases, VA loans are easier to qualify for than conventional loans.
The Veterans Administration offers a home loan guaranty benefit and other housing-related programs to help qualified veterans or their eligible family members buy, build, repair, retain or adapt a home for personal occupancy. VA loans offer up to 100% financing on the value of a home. VA loan recipients do not have to be first-time home buyers. Also, they may reuse the benefits and assign the loan to another qualifying person.
The terms of VA loans are quite generous, compared to other mortgages and even other federal loan programs. Among the benefits:
- No down payment is mandated unless required by the lender, or if the residence’s purchase price is above the established property value.
- There is no private mortgage insurance premium requirement.
- Closing costs are limited and may be paid by the seller.
- The lender may not charge a prepayment penalty if the borrower pays off the loan early.
- Assistance is available from the VA to help borrowers avoid default.
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KEY TAKEAWAYS
- A VA loan is a mortgage offered through a Department of Veterans Affairs program.
- Available to active and veteran service personnel and their families, VA loans are backed by the federal government, but issued through private lenders.
- VA loans have generous terms, such as no down payment, no mortgage.
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