VA Home Loans

I want to walk you through how the VA loan program actually works, who qualifies, and the things even some loan officers get wrong about it. A VA loan is a mortgage backed by the Department of Veterans Affairs. The VA does not lend the money. They guarantee a portion of the loan against default, which lets regular lenders offer terms that would otherwise be impossible. For example zero down payment, no monthly mortgage insurance, and interest rates that are significantly lower than conventional loans. To qualify you need a certificate of eligibility, which the VA issues based on your service. The general thresholds are 90 days of active duty during wartime, 180 days during peacetime, or six years in the Reserves or National Guard. Surviving spouses of veterans who died in service or from a service connected disability can also qualify. VA loans have no down payment requirement. You can finance 100% of the purchase price, which is the single biggest advantage. Most other zero down programs are restricted by income or geography. VA is not. You just have to be a veteran. There is no monthly mortgage insurance with VA loans either. On a conventional loan with low down payment, you pay PMI. On FHA loans, you pay MIP. On VA, you pay neither. That alone can save a few hundred dollars a month compared to other low down payment options. The trade off is the VA funding fee, a one time fee rolled into the loan ranging from roughly 1.25% to 3% depending on factors. Veterans with a service connected disability rating are exempt from the funding fee entirely, as are surviving spouses receiving DIC. Credit requirements are more flexible than conventional. The VA itself does not set a minimum credit score, but a general guide is 580 to 620 or higher. Debt to income guidelines also have much more flexibility on VA than conventional. VA loans can be used more than once. Many veterans assume they have used up their entitlement when they bought their first home, but often they have not, or their entitlement was restored after they sold. VA loans can also be assumed, which in a high rate environment is a real selling point. If you are a veteran and want straight advice on whether VA is right for your situation, schedule a discovery call.