What are VA Loans?

VA Loans are offered through private lenders, mortgage companies or banks. Through this program, the Department of Veterans Affairs works to support the needs of servicemembers, veterans, and qualifying surviving spouses and helps them purchase affordable mortgage loans.

VA Loan candidates are evaluated based on length of service, duty status, and character of service.

The following VA Loan Sub-categories are available for consideration – each with differing benefits and options depending on each borrower’s unique needs and circumstances:

• Adapted Housing Grants: These loans assist Veterans with a permanent and total service-connected disability purchase or with the construction of an adapted home or to alter an existing home to accommodate the disability.
• Native American Direct (NADL) Program: Eligible Native American Veterans finance the acquisition, building, or improvement of homes on Federal Trust Land, or reduce the interest rate on a VA loan.
• Interest Rate Reduction Refinance Loan (IRRRL): This type of loan allows borrowers to receive a lower interest rate by refinancing an existing VA loan.
• Purchase Loans: The benefits of this type of loan is that you can get a competitive interest rate usually without the need of a down payment or private mortgage insurance.
• Cash-Out Refinance: These loans permit the borrower to remove cash from home equity to use towards paying for school, eliminating personal debt or investing in home improvements.

VA Loans have many of the same steps as traditional loans. You start with looking for a VA lender and going through the steps for prequalification. This step helps borrowers learn an approximation of what they can afford by examining income, credit, assets, veteran entitlement, and financial indicators.

Following prequalification comes a loan preapproval and the much-sought-after preapproval letter. Preapproval letters validate your borrowing power to real estate agents and other sellers.

When it comes time to make an offer on a home, find an agent who is familiar with VA loans. This will help during the negotiation and contract process.

The next step in the home purchasing process is called being “under contract.” During this state of home purchasing, the lender will ask for a VA appraisal of the property you wish to buy. A VA appraisal differs from a home inspection in that this VA appraisal ascertains if the property meets “fair market value and the VA minimum property requirements.” 

Simultaneously to the VA appraisal, underwriters will examine your income, financial statements, and appraisal to sign-off on moving your loan to closing. An official home closing will require your signature on numerous legal documents before you are officially handed the keys to your new home.

1. VA Entitlements can be used for multiple home purchases. You just have to pay off your loan before you reapply for a new loan.
2. VA loans are for primary residences only.
3. The VA’s loan backing means borrowers don’t have to purchase mortgage insurance. However, there is a VA funding fee.
4. There is no prepayment penalty.