Top 10 Benefits of the VA Home Loan Program


Becoming a homeowner is one of life’s greatest achievements. It gives you the chance to build up equity and, most importantly, provides your family with a warm, safe place to live.

However, qualifying for a mortgage loan can become an obstacle to this achievement. Down payments, private mortgage insurance and stringent credit requirements can all hinder your ability to get approved. Fortunately, the U.S. Department of Veterans Affairs (VA) offers a home loan program for service members and veterans looking to purchase (or refinance) a home.

The VA’s home loan program has many advantages over traditional mortgage loans. From no down payments to loan security, here are the top 10 benefits VA home loans offer veterans looking to purchase a home.

1. No Money Down

While most home loan programs require you to put at least some money down, the VA’s home loan program does not. You are able to finance 100 percent of the home you are looking to purchase.

2. No Private Mortgage Insurance

Typically, if you were to take out a conventional or FHA loan, you would have to pay for mortgage insurance if your down payment was less than 20 percent. This is to ensure the lender can recoup part of the costs in case you default. The VA prohibits lenders from charging mortgage insurance on VA loans because they are guaranteeing that a portion of the loan will be repaid to the lender, even if you default.

3. Looser Credit Requirements

Because the VA guarantees a portion of your home loan, lenders are typically more willing to work with you–even if you have less-than-stellar credit. However, keep in mind that banks will still evaluate your income and debt when underwriting loans to ensure you can afford the house.

4. Competitive Interest Rates

VA home loan interest rates generally hover around conventional home loan rates, but oftentimes they are .5 to one percent lower. Again, this is because the VA backs each loan with a guaranty, so banks are more willing to work with you.

5. No Prepayment Penalties

Some conventional loans have prepayment penalties, meaning if you pay off the loan too early, there will be a monetary penalty so the lender can recoup the interest they lost out on. VA loans have no such penalty, allowing you to move or refinance with no risk of penalty at any time.

6. Not Just a One-Time Deal

While you can usually only take out one VA home loan at a time, the good news is that once you are eligible for this benefit, you are eligible for life. This means you can use the VA home loan program more than once, so long as you have paid off the initial loan or have remaining entitlement available.

7. Ensures a Quality Home

Before lenders can finalize the loan, the VA must inspect and appraise the home. If the VA appraiser finds any significant problems, the seller must fix them before the sale is finalized. This process ensures that you are buying a quality, move-in-ready home for a fair, reasonable price.

8. Offers Security

One of the great things about the VA home loan program is that it has the lowest foreclosure rate of any of the major mortgage lending programs. This is because the VA ensures that you are getting a quality home you can afford during the initial lending process. However, if for some reason you do experience financial hardship and default on your loan, the VA will offer you assistance in negotiating with the lender to help you stay in your home.

9. Limits Closing Costs

The VA limits what closing costs and fees lenders can charge on VA loans. This can lead to significant savings on the loan, allowing you more money to put toward cosmetic improvements, moving expenses and new furniture.

10. Variety of Options

VA loans are very flexible. You can take out a fixed-rate loan or an adjustable-rate loan. You can use it to purchase a new house, condo, townhome, duplex or refinance a conventional loan into a VA loan. If you are disabled due to service, you can use a VA loan to adapt your house to  your disability. You can also use it to make energy-efficient improvements to your existing house. The possibilities are really endless.

The VA Home Loan Program has helped millions of service members and veterans achieve their dreams of homeownership, and now it’s your turn. For more information on VA Home Loan application requirements, check out our “Applying for Benefits 101” article.

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