We all know that most of us need a mortgage in order to buy a home. We go to a lender and complete all the necessary paperwork and then we can buy the house, paying off the mortgage amount that was lent to us in monthly instalments.
A VA loan, then, is a mortgage loan guaranteed by the United States government and for the use of American veterinarians, military members, current members, and spouses of selected surviving members. Veterans can then use this mortgage to purchase a single family home, condominium, multi-unit properties, manufactured homes, or new construction property.
While it is the VA that financially guarantees qualifying loans and that sets the rules for who can qualify and when, and sets the guidelines, the money does not actually come from the government, but instead from any qualifying lender (a bank or other financial institution).
The purpose of these VA loans is to provide financing for a home for service members and their families without the worry of having to take out a down payment like you do with other mortgages. If you don’t have to come with a down payment then more of your money can go towards paying off the mortgage and that’s the idea of the loan.
The original Act of Congress was passed in 1944, after World War II, and since then more than 20 million mortgages have been issued. After some modifications over the years the scheme has been expanded and increased to allow more service members to qualify and to include more housing options for those members.
If you qualify for a VA loan, you are allowed 103.3% financing without private mortgage insurance which is a huge savings over a conventional mortgage. You can also get 20% for a second mortgage and up to $6,000 for energy-efficient improvements to your home. On top of that, a 0-3.3% VA financing fee can be added, again, much better than a traditional mortgage.
Joining the military isn’t easy, and it’s good to know that once you’re a veteran, there’s help financing your estate. Whether you’re still serving, you’re a proud vet, the wife of a fallen hero, the government has you covered with perks when it comes to financing your home.