Frequently Asked Questions About VA Loans

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If you have experience serving in the U.S. military and want to purchase a home, you may qualify for a VA loan. These types of loans for veterans can offer financial breaks that most other types of home loans don’t, and getting one of these loans may help you move into your ideal home faster. If you’re confused about how VA loans work, here are some answers to some commonly asked questions that will help you get a better understanding.

Who issues VA loans?

Like with other types of mortgages, VA loans are issued by banks and other financial institutions that offer them. However, unlike other home loans, VA loans are partially insured by the U.S. Department of Veterans Affairs. The additional insurance alleviates some of the risks that the financial institutions must take to issue the loans, which means that you might get a VA loan with better terms.

What are the eligibility requirements?

The eligibility requirements for the VA loan include a Certificate of Eligibility (COE) and a minimum amount of time served in the military. The exact minimum time depends on your branch of service and the nature of your duty. In most cases, you’ll need to meet at least one of the minimum service requirements:

  • 90 consecutive days of wartime service
  • 181 active days of peacetime service
  • Six years of National Guard or Reserves service
  • Being the spouse of a deceased service member who died as a result of their service

If you don’t meet one of these basic requirements, you might still be eligible for a VA loan if you were discharged honorably because of a medical condition or another circumstance that prevented you from fulfilling your service duties.

Can active service members still apply for VA loans?

You don’t have to be retired from the military and can still be actively serving if you want to get a VA loan. You’ll just need to verify your active duty status when you apply for a COE. However, if your income from the military fluctuates because of differences in the amount of time that you actively serve, you may face additional challenges when seeking a loan from lenders, as you might be considered a greater risk for defaulting on loan payments.

Is a down payment required?

In the case of a VA loan, no down payment is required to get approved in most cases. The financial institution that issues the loan has the final say on whether a down payment is required, but many lenders won’t ask you to furnish money upfront to guarantee the loan. Even if your financial institution doesn’t require a down payment, you might get a better deal on your VA loan if you’re able to pay for part of the home with an upfront payment. Even though you won’t likely need to give a down payment, you’ll still have to pay a VA funding fee along with additional fees that are related to the closing costs.

What is the VA funding fee?

This is a one-time fee that most lenders require people who qualify for VA loans to pay before the loan money is given. The fee covers a percentage of the total loan amount, and the percentage that you pay will depend on your time in the military, whether you paid a down payment, and other factors. The VA funding fee chart is a handy online tool that you can use to calculate what you might have to pay to cover this fee.

Why does the home I want to buy need to be appraised before I can get the loan?

Most homes need to go through the appraisal process before lenders approve mortgages, regardless of the home loan type. For a VA home loan, a licensed appraiser who’s approved by the U.S. Department of Veterans Affairs will be sent by the lender to verify the home’s value. The appraiser will also inspect the home to ensure that it’s free of any defects that could pose safety hazards. In most cases, the appraisal fee is paid by the lender.

A VA loan may clear some of the roadblocks that are standing in your way to getting the right home. VA loans have helped many veterans realize their dreams of homeownership and saved applicants a lot of time and money.

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