VA mortgage loans are home loans backed by the United States Department of Veterans Affairs (VA). They are available to borrowers who meet the criteria for military service established by the VA.
Understanding VA Loans
The U.S. government offers a mortgage program to qualified veterans, active-duty military members, and spouses of military members. The money is not loaned by the VA, rather the VA backs loans made by private lenders.
The VA controls the qualifying standards, the terms of the mortgage offered, and the portion of the loan that will be guaranteed. Borrowers of VA home loans must present evidence that they meet the eligibility criteria set by the VA.
VA Loan Eligibility
To apply for a VA loan from an authorized lender, the borrower must present a Certificate of Eligibility (COE) from the VA. A COE is issued based on meeting certain minimum requirements. Service members from any branch of military service, including the National Guard and the Reserves, may be able to qualify for a COE.
VA loan eligibility is generally based on time served, duty status, and discharge status. Service members who are unable to get a COE, may still be eligible if they were discharged for:
- The convenience of the government, if they served at least 20 months of a 2-year enlistment.
- Early out, if they served 21 months of a 2-year enlistment.
- Reduction in force.
- Certain medical conditions.
- A service-connected disability related to military service.
Once the VA’s standards have been met, the borrower must also consider the criteria set by the individual lender where they are applying for the mortgage. However, it is often easier to get a VA mortgage loan than to qualify for a conventional mortgage loan.
Features of VA Loans
Eligible borrowers can greatly benefit from a VA home loan. Benefits of a VA home loan include:
- 100% Financing Availability: Eligible borrowers may not be required to pay a down payment on their home mortgage.
- No First-Time Homebuyer Requirements: While some loan programs require the borrower to be a first-time homebuyer, VA loans do not have this requirement.
- No Mortgage Insurance Requirements: Borrowers will not be required to pay premiums for mortgage insurance on a VA loan.
- No Prepayment Penalties: Lenders providing VA loans are not allowed to charge borrowers a penalty for repaying the loan early.
- Default Avoidance Assistance: Borrowers at risk of defaulting on their mortgage may be able to get new repayment plans, loan forbearance, loan modification, time extension for private sale, short sale, or deed-in-lieu of foreclosure on delinquent home loans. These benefits are intended to assist the borrower in avoiding foreclosure and to retain their homes.
- Additional State Benefits: Many U.S. states offer additional benefits to VA loan borrowers, such as tax reductions.
The terms of a VA loan are typically more generous than conventional mortgages, leading them to be a favorable option for many eligible service members.
VA Loan Types
Along with the traditional VA home mortgage, some alternative options are available to those who meet more specific requirements. These alternative types of VA loans include:
- Cash-out Refinance Loans: A cash-out refinance loan allows qualifying borrowers to get cash out of their home.
- Interest Rate Reduction Refinance Loans: This loan type allows borrowers with an existing VA loan to refinance that loan for a better interest rate.
- Native American Direct Loan Program: Qualifying Native American veterans or those married to Native Americans may be eligible for a loan to purchase, construct, or improve a home on federal trust lands. These loans often come with mortgage interest rate reductions.
Servicemembers and veterans with certain service-connected disabilities may be eligible for a grant to increase mobility as part of the Specially Adapted Housing (SAH) program.
Marimark Mortgage is based in Tampa, Florida and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.