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What Is A VA Loan

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Understanding VA Loans

A Veterans Affairs (VA) loan is a mortgage loan popular among service men and women in the United States, because it is guaranteed by the Department of Veterans Affairs.

Who is Eligible?

There are a few requirements for eligibility. Applicants have to be either a member of the military, a veteran, a reservist, or in the National Guard to meet the eligibility requirements. The VA also gives loans to spouses of military members who have died while on active duty. Military members who are on active duty for 180 days or around six months are eligible to apply. Members of the National Guard and Reservists must wait a while longer. They are usually eligible after 6 years of service, but if they get called for active duty before that, they become eligible after six months of active duty.

Benefits of a VA Loan

There are several benefits to being eligible and applying for a VA home loan. Applicants can receive a home loan without any down payment. Conventional loans may have down payments of up to 20%. This means a $200,000 home could require an upfront down payment of $40,000 cash. The VA loan recipient is able to keep this entire down payment in their savings account.

The VA home loan also doesn't require you to have mortgage insurance. This means that a decent amont of money can be saved every month. For example, if a borrower gives a 3.5% down payment on a $200,000 insured mortgage, she will be paying $100 per month in insurance costs alone. This results in $1,200 per year in insurance payments on top of her mortgage payments. The VA loan recipient would automatically save this entire $1,200 per year.


Even though a loan through the Department of Veterans Affairs is usually cheaper than a traditional home loan, there are still some associated fees. There is a one-time funding fee, and this fee varies depending on the down payment. It also varies depending on the type of veteran applying for the loan. For example, suppose that a military enrollee decides to apply for a VA loan for the first time. They decide to pay a $0 down payment. They would have a fee that totals out to be 2.15 percent of the loan amount. This fee can be reduced up to 1.25 percent if the borrower pays a 10 percent down payment. If it is her second home loan through the VA, she would pay a 3.3 percent of the total loan amount fee.

VA Appraisal

A VA appraisal is an assessment of the property's value and condition. This assessment is two-fold. The VA wants to make sure the home is worth what you're offering to pay for it. Second, the VA wants to make sure it meets the guidelines.

A VA home loan is an excellent option for many people who are looking to purchase their first or second home. They offer many incentives that are attractive for allowing borrowers to purchase a home with fewer fees and little to no down payment.

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