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VA Home Loans - Veteran's Guaranteed Loan, GI Bill of Rights, Military Loans

VA Home Loans - Home Loans for Military Personnel

Last Updated: March 16, 2016

The VA (Veteran Affairs) Home Loan program was designed to help veterans finance the purchase of a home with favorable loan terms and at a rate of interest which is competitive with the rate charged on other types of mortgage loans. For a VA housing loan, a veteran is defined as a member of the Selected Reserve, active duty service personnel and certain categories of spouses established by the Servicemen Readjustment Act or the GI Bill of Rights. The Bill of Rights was enacted under President Franklin D. Roosevelt in 1944. The objective of the legislation was to help veterans achieve a life of security and comfort after serving their country.

Since the law was passed after World War II, many soldiers and other military personnel have benefited from it. Its timeliness provided the much needed hope that these people needed after fighting the war. It expressed the country's appreciation of their valor and efforts to restore peace. The housing and financial assistance these heroes received allowed them to rebuild their lives.

What are the Benefits of a VA Loan?

These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. The veteran is informed of the estimated property value through an appraisal and there is a limitation on closing costs. Lastly, they can opt for longer repayment terms and they have the right to prepay with penalty.

Eligible VA Loan Purchases

A veteran may use a VA loan to finance the following:

VA and FHA Loan

VA Loan Process

  1. Apply for a Certificate of Eligibility. A veteran who doesn't have a certificate can obtain one easily by making application on VA Form 26-1880, Request for Determination of Eligibility and Available Loan Guaranty Entitlement, to the local VA office.
  2. Decide on a home the buyer wants to buy and sign a purchase agreement.
  3. Order an appraisal from VA. (Usually this is done by the lender.) Most VA regional offices offer a speed-up telephone appraisal system. Call the local VA office for details.
  4. Apply to a mortgage lender for the loan.
  5. While the appraisal is being done, the lender can be gathering credit and income information. If the lender is authorized by VA to do automatic processing, upon receipt of a VA-approved appraisal, the loan can be approved and closed without waiting for VA's review of the credit application. For loans that must first be approved by VA, the lender will send the application to the local VA office, which will notify the lender of its decision.
  6. Close the loan and the buyer moves in.

Service Requirements for VA Loans

A person is eligible for VA financing if military service falls within any of the following categories:

Limitations on VA Loan Benefits

If you are qualified under the VA loan program, you can be assured of a loan amounting to 25 percent of the total value of your home so all you need to secure financing for is the balance of the the total value. If you need to borrow for the mandatory funding fee, you will have to apply for it separately as it is not included in the automatic eligibility provisions under the program.

The Veteran's Benefit Improvement Act of 2008 passed in October 10, 2008 allows veterans to purchase a home without any down payment in certain pre-approved home loan counties as stipulated by the Federal agency. The new law was signed by former President George W. Bush and it increased the maximum VA loan amount to nearly $1 million.

It is best to consult with a VA loan agency if you want to confirm your pre-qualifications under the VA loan program. These VA loan agencies are knowledgeable on the various cut-off dates that affect the required minimum periods of service. They can establish your eligibility and help you improve your chances to receive VA loan benefits.

For more information on VA Loans, go to the government website.

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