VA home loans are types of loans specialized for veterans, military members, and military families who need loans to acquire homes. These loans are offered to help veterans and military members to build, retain, repair, and purchase homes. What’s more, private mortgage lenders like banks and other mortgage companies provide this type of loan. A home loans allow borrowers to purchase homes without a required down payment.
Veterans and military members as well as their families who qualify can get VA loans to cover home expenses including refinancing. However, the VA does not directly offer loans to borrowers, instead, borrowers will need to get a VA loan through any of their approved mortgage lenders. These approved lenders also include most national banks and other lenders who specialize in these loans.
This lender does not require borrowers to make a down payment most times for loan approval. They also do not require mortgage insurance which makes them different from conventional and FHA loans. However, this lender requires borrowers to get mortgage insurance if they are paying less than 20 percent of the loan and also the VA funding fee.
Types of VA Home Loans
Irrespective of whether you need a VA loan for home purchasing, building, or refinancing, there are different types of VA home loans. These loans include:
VA Purchase Mortgage
Borrowers usually use this type of loan in purchasing homes. It provides home purchase funding for borrowers looking to purchase a home.
VA Construction Loan
If you need a VA loan to fund the construction of a home, this is the right loan to take. This loan covers the cost of land or lot, materials, and labor.
VA Streamline Refinance
VA streamlined refinance loan covers the payment of the old loan and replaces it with a new loan, interest rates, and loan terms. This type of loan does not require a credit check or appraisal.
VA Rate and Term Refinance
This loan is used to refinance an old loan with a new one along with new interest rates and terms.
VA Cash-out Refinance
If you want to refinance your loan, this is the right VA loan to take. This loan refinances old loans to a new one with larger loan amounts and a new interest rate and loan term along with a cash-out based on the home’s equity.
VA Rehab/ Renovation Loan
This loan is usually meant for fixing up and buying homes.
Native American Direct Loan (NADL)
Native American veterans who want to purchase, fix up, or build a home on a federal trust land, this is the right VA loan to take.
Advantages and Disadvantages of VA Home Loans
There are several benefits and downsides to this loan. While it is important to understand this loan alongside how it works, it is also important to be aware of its benefits and drawbacks to assist you in making the right decisions. However, below are the advantages and disadvantages of VA home loans:
Advantages
- There is no required down payment.
- VA requires no mortgage insurance.
- Limited lender fees.
Disadvantages
- VA requires a funding fee.
- VA loans are only limited to primary residences.
These help you identify whether or not this loan is worth taking. However, depending on your home needs, you can easily identify whether or not you need this loan.
Am I Eligible for VA Home Loans?
The key requirement to be eligible for this loan is to be a veteran, a military member, or from a military family. Aside from these, to be eligible for this loan, you must meet the following requirements. You are eligible if:
- Your spouse died on duty.
- You are on an active veteran or military duty and were justly discharged.
- You meet the minimum service requirements.
- You served 90 or more succeeding active days during wartime or 181 succeeding days or more of active service during peacetime.
- You served for over six years in the Selective Reserve or National Gard.
Before proceeding with the loan, you need to provide a certificate of eligibility which indicates that you are eligible for the loan.
How To Apply For VA Home Loans
Just like other mortgage loans, the VA home loan application process is just the same. The application process also involves comparing different lender’s loan terms and rates along with the provision of employment and income proof. However, below are the steps to follow to apply for VA home Loans.
- Obtain your Certificate of Eligibility.
- Assemble your financial information in a file.
- Compare loan rates and offers from different VA lenders.
- Appeal for preapproval.
- Resume your search for homes.
- Complete the loan application process.
After doing this, stay prepared to provide additional credit or information about your finances for the underwriting process. Ensure you follow the application process properly to aid approval.