VA home loans were introduced to provide affordable housing for veterans and active service personnel. The U.S department of Veteran Affairs act as a guarantor to the loan. Since the loan is guaranteed by the government, lenders are protected against the loss of principal if the borrower defaults on the loan.
Not all people are eligible for a VA home loan, but a person who is qualified, is likely to get much better terms and interest rates than with a conventional home loan. Read the list of Eligibility conditions for qualifying for a Veteran Affairs home loan.
Benefits of VA Home Loans
1. Since the government guarantees the loan, lenders are insured against a loss if the borrower defaults. This often encourages them to give better rates for VA loans than they would give for a conventional loans.
2. There is no need for costly private mortgage insurance since the government insures the loan. This and the fact that the borrower gets the lowest interest rates can save home buyers hundreds of dollars every year.
3. Credit rating and income requirements for a VA loan are not as stringent as those for conventional loans. Even people who do not qualify for a conventional loan may qualify for a Veteran Affairs loan, if they meet the eligibility criteria.
4. Borrowers can borrow up to 100% of the sales price of the house. In today's market conditions where lenders often require 10 to 20% down payment, VA loans may be the only available loans where zero down payment is allowed.
5. VA will guarantee up to $417,000 of the total loan.
6. Unlike an FHA loan in which the borrower has to contribute 1.25 to 1.5% of the total loan amount as upfront insurance premium, VA insures the loan at no cost to a veteran buyer.
Getting Approved for VA Home Loans
A veteran can apply for a Veteran Affairs loan with any mortgage lender that participates in the VA home loan program. The lenders may require a Certificate of Eligibility to prove that the borrower is eligible.
A certificate of eligibility can be requested by submitting a completed VA Form 26-1880 along with proof of service. In some cases it also possible to for the lenders to get a Certificate of Eligibility through an Internet-based application known as Web LGY system. Most lenders have access to the Web LGY system system, but it may work only in cases where the VA has sufficient data in their records of the veteran.
The site of U.S Department Veteran Affairs is a valuable source of information for VA Loans.
The benefits of the home loans make them very attractive to veterans who qualify, but it is a sad fact that even veterans who qualify do not always take advantage of the VA home loan program.
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