What are VA Loans?
A VA loan is a home loan mortgage or refinancing made by a private lender to eligible veterans. They are called VA Guaranteed Home Loans because the federal government backs a percent of the loan through the U.S. Department of Veteran Affairs. The program, launched during World War II, was designed to counter the difficult aftermath of wars and increase veteran home-ownership as set forth in the original Servicemen’s Readjustment Act of 1944, Public Law 78-346. While the home being purchased must be for personal occupancy, since the loan is guaranteed by the federal government the veteran borrower is able to receive advantageous financing terms and can buy the home without a down payment due to the guaranty. For 2009, veterans may borrow up to $1,094,625 (in certain areas ) and $417,000 in most counties. The maximum guaranty the VA will provide is for 25% of loans over $144,000. No down payment is required as long as the purchase price does not exceed the property’s “reasonable market
The VA (Department of Veterans Affairs) doesn’t actually offer loans. It simply insures loans that are written by banks and mortgage companies. Since the end of World War II more than 14 million veterans and military members have bought homes with the aid of VA loans with no-down payment requirement for most loans. This is a huge benefit and allows many more home buyers – especially in difficult housing and financial markets – to afford a home. What are the benefits of a VA Loan? · 100% financing, no down payment loans are common. · No PMI on VA loans. · No prepayment penalties on VA loans. · Loan qualification is sometimes easier than if you were applying for a conventional loan. · Less than perfect credit is usually accepted with VA loans. · Sellers can pay all closing costs. · VA assistance to veteran borrowers in default due to temporary financial difficulty. · Ability to finance the VA funding fee (no funding fee for disabled veterans) · No commissions, brokerage fees, or “buyer b
