We all know that most of us need a mortgage in order to buy a house. We go to a lender and complete all necessary paperwork and then we can purchase the house, paying back the mortgage money that was leant to us in monthly installments.
A VA loan, then is a mortgage loan that is guaranteed by the US government and for the use of American vets, military members, currently serving members and select surviving spouses of members. Veterans can then use this mortgage to purchase a single family home or a condominium, multi unit properties, manufactured homes or a new construction property.
While it the office of Veterans Affairs that financially guarantees the loans that qualify and who set the rules for who can qualify and when, and makes the guidelines the money doesn’t actually come from the government, but instead from any qualifying lender (bank or other financial institution).
The intention of these VA Loans is to supply funding for a home for service members and their families without the worry of having to come up with a down payment like you do with other mortgages. If you don’t have to come up with a down payment, then more of your money can go towards paying back the mortgage and that’s the idea of the loan.
The original act passed Congress back in 1944, after World War II and since then over 20 million VA home loans have been issued. After a few amendments over the years, the scheme has been expanded and increased to allow more service members to qualify and include more housing options for those members.
If you qualify for a VA loan, you are allowed 103.3% financing without private mortgage insurance which is a huge savings over a traditional mortgage. You can also get 20% for a second mortgage and up to $6000 for energy efficient improvements for your home. Furthermore, a VA funding fee of between 0 and 3.3% can be added on, again, a lot better than a traditional mortgage.
Being in the military is not an easy job, and it’s nice to know that once you are a veteran there is help out there for financing your property. Whether you are still serving, are a proud vet of the spouse of a fallen hero, the government has you covered with perks when it comes to financing your home.