Veterans Administration Home Loan
VA Guaranteed Home Loans for Veterans
The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is competitive with the rate charged on other type of mortgage loans. For VA housing loan purposes, the term "veteran" includes certain members of the Selected Reserve, active duty service personnel and certain categories of spouses.
- Borrower must be an eligible veteran who has available home loan entitlement
- The loan must be for an eligible purpose
- Borrower must occupy or intend to occupy the property as primary residence within a reasonable period of time after closing the loan
- Borrower must have enough income to meet the new mortgage payments on the loan, cover the costs of owning a home, take care of other obligations and expenses, and still have enough income left over for family support (a spouse's income is considered in the same manner as the veteran's)
- Borrower must have a good credit record
Eligible Loan Purposes
- To buy a home
- To buy a townhouse or condominium unit in a project that has been approved by VA.
- To build a home
- To repair, alter, or improve a home
- To simultaneously purchase and improve a home
- To improve a home through installment of a solar heating and/or cooling system or other energy efficient improvements
- To refinance an existing home loan
- To refinance an existing VA loan to reduce the interest rate and add energy efficiency improvements
- To buy a manufactured (mobile) home and/or lot
- To buy and improve a lot on which to place a manufactured home which you already own and occupy
- To refinance a manufactured home loan in order to acquire a lot
Down payment Requirements
- Traditional Fixed Payment Mortgage, Buy down Loans, and Growing Equity Mortgage -- VA does not require a down payment if the purchase price or cost is not more than the reasonable value of the property as determined by VA, but the lender may require one. If the purchase price or cost is more than the reasonable value, the difference must be paid in cash from your own resources.
- Graduated Payment Mortgage -- The maximum loan amount may not be for more than the reasonable value of the property or the purchase price, whichever is less. Because the loan balance will be increasing during the first years of the loans a down payment is required to keep the loan balance from going over the reasonable value or the purchase price.
No commission or brokerage fees may be charged to you for obtaining a VA loan. However, you may pay reasonable closing costs to the lender in connection with a VA guaranteed loan, which can include a VA appraisal, credit report, survey, title evidence, recording fees, a 1 percent loan origination fee, and discount points. The closing costs and origination charge may not be included in the loan, except in VA refinancing loans.
A VA funding fee of 2.00 percent of the loan amount (2.75 percent for reservists) is also payable at the time of loan closing. This fee may be included in the loan and paid from the loan proceeds.
Read more information on VA loans.