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VA Loans: How They Work

VA loans are for current and veteran service members and eligible spouses. These mortgages have competitive interest rates and usually require no down payment!

If you’ve served in the military and need a mortgage, a VA loan may be just right for you. Whether you’re buying a home or refinancing. Here’s what to know – 

What is a VA loan?

A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs (VA) and issued by a mortgage company like us! A VA loan can make it easier to buy a home because it typically doesn’t require a down payment.

How does a VA loan work?

The VAs guarantee means the government will repay our lenders a portion of a VA loan if the borrower doesn’t make payments. This assurance reduces the risk for our lenders, which makes it possible for them to offer favorable terms and require no down payment.

Who can get a VA home loan?

Only qualified U.S. veterans, active-duty military personnel, and some surviving spouses are eligible for VA loans. You are likely eligible for a VA mortgage if:

  • You’re an active-duty military member or veteran who meets length-of-service requirements.
  • You’re the surviving spouse of a service member who died while on active duty or from a service-connected disability and you have not remarried or remarried after age 57 or Dec. 16, 2003. Spouses of prisoners of war or service members missing in action are also eligible.
  • You meet our requirements for credit and income. The VA doesn’t set a minimum credit score for VA loans, but our lenders do have varying minimum standards. We will also consider your income and debts to evaluate your ability to repay the mortgage.
  • The property you want to buy meets safety standards and building codes and will be your primary residence.

To show that you meet the military service or surviving spouse requirements, you’ll need to get a VA certificate of eligibility before the loan closes. You can ask any of our VA-approved lenders to obtain the document for you or request the certificate through the VA.

Types of VA loans

The VA loan program offers a variety of options, including:

  • Purchase and refinance mortgages
  • Rehab and renovation loans
  • Native American Direct Loan. 
  • Cash-out refinance
  • IRRRL

VA loan benefits

Here are the biggest advantages of VA loans:

  • No down payment or mortgage insurance required: Other loan types require down payments and can include an extra cost for mortgage insurance. 
  • Competitive interest rates: Average 30-year mortgage rates were lower for VA home loans than for FHA and conventional mortgages in every month of 2019, according to mortgage data provider Ellie Mae.
  • Limited closing costs: Closing costs are the various fees and expenses you pay to get a mortgage. The Department of Veterans Affairs limits the lender’s origination fee to no more than 1% of the loan amount and prohibits lenders from charging some other closing costs.

How many times can you use a VA loan benefit?

Fortunately, obtaining a VA loan isn’t a one-time deal. After using a VA mortgage to purchase a home, you can get another VA loan if:

  • You sell the house and pay off the VA loan.
  • You sell the house, and a qualified veteran buyer agrees to assume the VA loan.
  • You repay the VA loan in full and keep the house. For one time only, you can get another VA loan to purchase an additional home as your primary residence.

USA Mortgage is proud to help Veterans find and finance the homes they deserve! We are here to make sure you get the best rates for your financial situation! Reach out to one of our available and experienced loan officers today to start your home loan process.

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