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Created in 1944 by the United States government to help returning service members purchase homes without needing a down payment or excellent credit.
A VA Home Loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) and issued by qualified lenders. It allows eligible veter- ans, active-duty personnel, and their surviving spouses to purchase a home with no down payment and limited closing costs. The VA guarantees a por- tion of the loan, enabling the lender to provide more favorable terms.
Although the VA loan is a federal program, the government generally does not make direct loans to Veterans. Instead, private lenders like USA Home- ownership Loans while the loan while the Department of Veterans Affairs offers a guaranty.
This guaranty protects the lender against total loss should the buyer default, which provides an incentive for private lenders to offer the VA loan with better terms than other mortgage options.
- Get Pre-Approved: Contact a VA-approved lender to begin the pre-approval process.
- Find a Home: With pre-approval in hand, you can start looking for a home that meets your needs.
- Submit an Offer: Once you’ve found a home, submit an offer through your real estate agent.
- Have the Home Inspected: As part of the loan process, you’ll need to have the home inspected by a professional.
- Get an Appraisal: An appraisal is required to determine the value of the home.
- Get Final Approval: The lender will review all the documents and give final approval for the loan.
- Close the Loan: Sign all the necessary paperwork and close the loan.
- Make Your Mortgage Payments: Now that the loan is closed, you can begin making your mortgage payments.
- A copy of your driver's license or other government identification
- A copy of your DD-214 or Reserve/Guard points statements
- Obtaining Certificate of Eligibility (COE)
- A statement of service for active duty borrowers
- Recent pay stubs and W-2s for the last two years
- Recent bank statements
- Disability award letters
A Certificate of Eligibility (COE) is a document issued by the U.S. Department of Veterans Affairs (VA) that verifies a borrower’s eligibility for a VA loan. The COE serves as proof that the borrower meets the criteria for a VA loan based on their military service. It also contains important details about the borrower’s eligibility status and entitlement.
- To obtain a Certificate of Eligibility (COE) for a VA loan, you will need to fill out VA Form 26-1880, Request for a Certificate of Eligibility.
- You can submit the form online through the ebenefits portal, or you can print it out and mail it with any required documentation to the VA Eligibility Center.
- Get qualified with a USA Homeownership Loan officer and they will order the COE for you.
Note: If you have any questions about your eligibility for a VA home loan, please call the VA regional loan center at 877-827-3702 - Monday through Friday, 8:00 a.m. to 6:00 p.m. EST.
- No Down Payment: VA loans allow qualified borrowers to finance 100% of their home purchase. This means that no down payment is required.
- Low Interest Rates: VA loans typically offer lower interest rates than conventional mortgages. This can result in significant savings over the life of the loan.
- No Private Mortgage Insurance (PMI): Many conventional loan programs require borrowers to pay private mortgage insurance (PMI) if they are unable to make a 20% down payment. With a VA loan, no PMI is required.
- Reduced Closing Costs: Closing costs can add up quickly when buying a home. VA loans limit these costs, saving borrowers money.
- Flexible Credit Requirements: VA loans are typically easier to qualify for than conventional mortgages. This means that borrowers with less-than-perfect credit may still be able to get approved.
- Streamlined Refinancing: VA loans allow borrowers to easily refinance their mortgages with a streamlined process. This can help borrowers to reduce their interest rates and save money on their monthly payments.
- Multiple Uses: The VA Loan is not a one-time option. Once you earn the VA loan benefit, it's yours for life. You can reuse the VA loan over and over again, and it's even possible to have more than one active VA loan at the same time.
- Purchase Loan: Allows veteran homebuyers to purchase a home without a down payment.
- Cash-Out Refinance Loan: Allows veteran homeowners to refinance their mortgage and receive cash out of their home’s equity.
- Interest Rate Reduction Refinance Loan (IRRRL): Helps veterans refinance their current VA loan into a lower interest rate loan.
- Adapted Housing Grant: Provides funds to veterans with certain service-connected disabilities to purchase or construct an adapted home.
- Native American Direct Loan (NADL): Offers direct loans to Native American veterans for the purchase, construction, or improvement of a home on federal trust land.
- Manufactured Home Loan: This loan is designed to help veterans finance the purchase of a manufactured home.
- VA Jumbo Loan: Typically, a VA loan is considered a VA jumbo loan when the loan amount exceeds the county-specific VA loan limit. The VA loan limit for most counties in 2023 is $726,200 but reaches $1,089,300 in high-cost areas. With a VA jumbo loan, homebuyers have increased access to homes in high-cost metro areas, while utilizing their VA loan benefits
- The fee varies depending on the type of loan, down payment, and the borrower’s military category.
- The VA also exempts some Veterans and surviving spouses from the funding fee entirely. The most common exemption is for Veterans receiving compensation for a service-connected disability. Surviving spouses with VA loan eligibility are also exempt. Only the VA can make a determination about funding fee exemptions.