VA Home Loans is a confusing term because the VA doesn’t loan money to buy homes!
What is does is makes a promise to those who do loan money (aka mortgage lenders, etc.). The VA lets these lenders know, through their Purchase Loan program, that it will vouch for you up to a certain dollar amount. Essentially they act as a reference check, a guarantee that you as a military member or Veteran are a safe bet to loan this much money to!
What’s the advantage of this?
For starters, there’s no down payment required.
Most home loans require a minimum of 5%, and up as high as 20%. Who has that kind of cash lying around? If you do, that’s great, because yes, a hefty down payment will lower the overall cost you pay on the home since you’re financing less (and thus paying less interest). But not everyone has those funds set aside, especially new families.
And people putting down less than 20% usually have to buy PMI—Private Mortgage Insurance, which increases your monthly payments.
So that’s the second advantage—with a VA Home Loan certificate, no PMI, either!
And third—because a part of the loan is backed by the VA, this usually qualifies buyers for a lower interest rate.
Another cool part of VA Home Loans? You can use them over and over by having them simply restored after you sell a home. And you can use them for building new homes or upgrades on existing ones.
How to Get a VA Home Loan Certificate of Eligibility
To use the VA Purchase Loan program, Veterans or military members need their Certificate of Eligibility, which can ordered from eBenefits (or by just asking your mortgage lender to help you). But using eBenefits is pretty simple, especially if you have used a VA loan before.
The Certificate of Eligibility for loan guaranty benefits will state:
“This Veteran's basic entitlement is $36,000*” and “The veteran is eligible for the benefits of Chapter 37, Title 38, U.S. Code, subject to any condition(s) cited below. Basic entitlement for veterans who have not previously used home loan benefits is $36,000. Additional entitlement is available for most loans in excess of $144,000. In such cases, the entitlement amount is 25% of the VA loan limit for the county where the property is located. VA county loan limits are adjusted annually, and the current limits are available at www.homeloans.va.gov.”
So that “additional entitlement” line is very important, because it adds to the “basic entitlement” which is only $36,000.
Refund of Funding Fees
Funding fees may also be waived in cases where the Veteran has service-connected disability. If a funding fee was paid which should not have been, it is possible to seek a refund. To get a refund, you’ll have to go through your mortgage service or a VA Regional Loan Center at (877) 827-3702.
Interest Rate Reduction Refinance Loans
IRRRLs let you apply for a lower interest rate, by refinancing. You just have to make sure the cost of going through a new loan process is worth the money you’ll be saving, meaning the new rate should be a minimum of 1% less. Work closely with the lender to ensure this is something worth your while. It will not require a new Certificate of Eligibility, if you have one already. You’ll just reuse the existing one.
Native American Direct Loan (NADL) Program
NADL helps eligible Native American Veterans finance the purchase, construction, or improvement of homes on Federal Trust Land, or reduce the interest rate on a VA loan.
Adapted Housing Grants
These adapted housing grants help Veterans with a permanent and total service-connected disability purchase or build an adapted home or to modify an existing home to account for their disability.
Additional State Housing Benefits for Veterans
Many states offer additional Veterans benefits. To see what is available in your state, visit
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