What Is the VA Home Loan Program?
Before World War II, the future of Veterans returning from war wasn't a priority for the U.S. Government. The tide changed on June 22, 1944, when President Franklin D. Roosevelt signed the GI Bill into law. One of the key provisions in the bill is the federally guaranteed home loan program that gives servicemembers returning from war an opportunity to buy homes without a lot of cash up front.
Unlike many other benefits programs, the home loan program operates as a partnership between the U.S. Department of Veterans Affairs (VA) and qualified private banks/mortgage companies. VA home loans are backed with a partial federal guaranty. As a result, there is less risk for private lenders and typically more favorable terms available to Veterans, active-duty military, and certain surviving spouses, among others.
One of the most commonly known features of the program is its no-down-payment potential, although there are other attractive benefits of VA loans that you may not have heard about.
Other Features of VA Loans
- No private mortgage insurance (PMI) (VA Funding Fee for program use unless exempt)
- Competitive interest rates
- Streamline refinancing available
- 100% loan-to-value capability
- Straightforward qualifying standards
- Limitations on closing costs
Who Is Eligible for VA Loans?
Only eligible borrowers can obtain a VA-backed mortgage, and your eligibility depends on how long and when you served in the military. If you’re interested, you can dig into eligibility’s finer details.
Here is a very simplified breakdown of minimum service requirements. You may be eligible for a VA loan if you satisfy at least one of these requirements:
- 2 years of active duty
- 6 years of Reserve/Guard service
- 90 days or full call of wartime active duty
- 181 days or full call of peacetime active duty
Generally, if you’ve been discharged from the military, you still may have earned eligibility. The key factor is that your discharge must be for other-than-dishonorable reasons in order to qualify for a VA loan. For instance, if you were released for hardship, the government’s convenience, reduction in force, a specific medical condition, or a duty-related injury/illness, there’s still hope.
VA Loans NOT Just for Veterans
Home loan benefits can also be earned by certain groups other than Veterans, active-duty servicemembers, and those serving in the Reserve/Guard. Other beneficiaries may include surviving spouses and officers in the National Oceanic and Atmospheric Administration (NOAA) and Public Health Service Commissioned Corps (PHSCC). VA loan benefits are also available to eligible military academy cadets and midshipmen, World War II merchant seamen, and U.S. citizens who served with allied forces in World War II.
What Can You Do With a VA Loan?
VA loans can be used to purchase and refinance single-family homes, VA-approved condos and townhomes, multi-family dwellings (up to four single-family units), certain manufactured homes and lots, new construction, and even rural farmhouses. Keep in mind that the home you finance has to meet VA minimum property requirements, and you must certify that you will occupy it as your primary residence (except in the case of streamline loans). Not all lenders fund loans for every VA-approved property type.
If you’ve served your country, you may have earned eligibility to apply for a VA loan. To find out more about VA loans, contact our experienced mortgage team at 800-217-1596.
