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VA Home Loan content in future use

How the VA home loans differ from the others

The VA loan is a specialized mortgage loan category that is guaranteed by the U.S. Department of Veterans Affairs (VA). This type of home loan is only issued by the approved lenders and is backed by complete government security. VA loan is a unique and a powerful financial tool in the form of a home loan that is created specifically for the military homebuyers.

The Details of the VA home loans

The VA loan program acts as a flexible and a robust lending option for the military borrowers where the loan structure pledges to repay a certain sum of every VA loan it guarantees in the unlikely event where the borrower defaults on the payment. Below are some of the important details of the program-

  • The VA home loan program was created in 1944 by the United States government
  • This specialized loan program was aimed to help the returning service members buy homes without the usual hassles of a heavy down payment requirement or high credit criteria
  • It is an excellent home loan benefit program to help the veterans, active duty military members, and their families either purchase new homes or refinance their existing mortgages.

Advantages of the VA loans

The VA Home Loan program is an extremely beneficial loan proposition for the service members. Considering the strict lending requirements in the recent years coupled with ever-fluctuating housing market rates in the US, applying for a traditional home loan becomes a nightmare for the military homebuyers. In such a scenario, the VA Loan is no less than a boon for the military home buyers who find it extremely difficult to trade the otherwise tough home loan requirements, large down payments, and strict credit standards.

The first and foremost advantage of the VA loans is that they come with lesser stringent loan underwriting standards and requirements as compared to the other conventional loan options. Furthermore, the VA loans come with no private mortgage insurance (PMI) liability, a heavy monthly expense that the borrowers of the non-VA loans are required to pay in case they put any less than 20 percent of the total loan amount.

Below are some of the advantages of the VA home loans-

The VA loan is a specialized mortgage loan category that is guaranteed by the U.S. Department of Veterans Affairs (VA). This type of home loan is only issued by the approved lenders and is backed by complete government security. VA loan is a unique and a powerful financial tool in the form of a home loan that is created specifically for the military homebuyers.

  • Government security and ease of getting qualified for the loan
  • More competitive interest rates as compared to other home loan options
  • Option of easy refinancing of loans in case the homeowners wish to
  • There is no hassle of any prepayment penalties
  • Much higher debt-to-income ratios allowed in VA loans as compared to the other conventional options.

Eligibility criteria for the VA Loan

All across the US, many veterans, military personnel, and active-duty service members are eligible to apply for the VA loan program. Below are some of the eligible categories under the VA loan program-

  • All serviceman and the military members who have served 181 days on active duty or maximum of three months during wartime
  • Spouses of the ex-serviceman/ military people who were killed in the line of duty
  • The veterans or military people who have spent at least a half-dozen years in the National Guard or Reserves

It is important to note here that the veterans and active-duty service members are required to obtain a Certificate of Eligibility from the VA. This is an official document to certify that the prospective borrower is entitled to the VA home loan benefit and is eligible to participate in the VA loan program.

How VA loans differ from the traditional loans

Among the major differences between the VA loans and other traditional home loans are-

  • Down payment relaxation

VA home loan attracts 0% down payment for the qualified borrowers whereas the majority of other home loans require heavy down payments to be paid by the borrowers that can go as high as 20% to secure a home loan which is way beyond the reach of many homebuyers

  • VA loans are guaranteed, safe, and offer competitive rates

Since the VA loans are backed the government security, lenders feel a greater degree of flexibility and safety, which in turn leads to better and competitive interest rates as compared to the non-VA home loans

  • No PMI liability

Since the VA Loans are safe and are government backed, banks generally do not require the borrowers to buy Private Mortgage Insurance, whereas PMI is an essential requirement in other conventional loans which adds to the monthly expenses of already burdened home loan borrowers

  • Easy qualification criteria

VA loans enjoy more credibility among the banks due to the government backing on these loans which makes it easier to apply and qualify for the VA Loans, making them easier to secure. Non-VA conventional loans, on the other hand, require much stricter procedures to be followed by the

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