22nd New York National Guard at Harper's Ferry

VA home loans are guaranteed home loans made available to U.S. veterans by the Veterans Administration. These loans are made by private lenders, like a bank, a mortgage company or a savings & loan company. They’re offered to eligible veterans to use to purchase a home. The loans are backed by the VA, which means that the lender is protected from a loss in the event that you are unable to repay the home loan. This guaranty comes in place of the protection a lender normally gets by making you put down a down payment in order to get favorable financing.

The VA doesn’t compel lenders to offer loans that would otherwise violate their lending policies. Borrowers still have to qualify for a loan based on certain income and credit standards. In some cases, a person may still not qualify for a home loan.

The VA home loan entitlement is $36,000 standard. If loans are higher than $144,000, the entitlement rises by 25 percent fo the VA county loan limit, which can vary from one place to another. What this means is that a veteran who qualifies can get a home purchase loan for those amounts without a down payment.

In order to get a VA home loan, there are some things you need to do. You’ll find a home and sign a purchase contract that’s conditional based on your VA home loan being approved. You then present a Certificate of Eligibility from the VA to your lender and apply for the loan. A lender may be able to obtain the Certificate of Eligibility for you. The lender then will gather information on your credit and income, have the home appraised, and let you know their decision on the loan.

VA Home loans have many benefits. For one, there is usually no down payment. In addition, the interest rate is negotiable. The buyer is also informed of the reasonable value of the home during the process. You can also finance the VA funding fee. If you make a down payment of five percent or more, you may pay even less in fees. You also won’t have mortgage insurance premiums, and you will have the right to prepay without any penalty.

A VA home loan only guarantees the loan, of course. It doesn’t guarantee that the home doesn’t have defects, and the VA can’t make a builder fix something done wrong during construction. You should still consider having a residential inspection before you sign the purchase agreement, and will have to take any issues with the builder up on your own after the fact.