VA Mortgages And Loans

By John G

 

Veterans Affairs mortgages or VA mortgages, are available to active military members and military veterans. One of the advantages for this type of loan is that a down payment may not be necessary. A VA mortgage that is obtained through a private lending institution is 100% guaranteed by the US Department of Veterans Affairs. This means that they do not require mortgage insurance and their will not be a minimum credit score requirement.

Mortgage Application Approved Stamp Showing Home Loan AgreedA VA loan is a lot easier to obtain than a conventional mortgage. Many traditional mortgages from a variety of financial institutions often require that a borrower meet difficult qualification criteria both financial and personal. The US Department of Veterans Affairs, on the other hand, is not a mortgage. The mortgage for a dwelling will need to be secured by a private lender such as a bank or credit union. The mortgage for a VA loan however will be guaranteed by Veterans Affairs but only if specific guidelines are met.

The majority of members of the military, National Guard, veterans, and reservists are eligible when applying for a VA loan. If a military member has died or become disabled during active duty then the spouse can also apply for a VA loan. An active military member will normally qualify once they have reached 6 months of service. National Guard and reservists members will need to wait 6 years before applying. If a reservist or National Guard is called up for active duty however, then they can gain their eligibility after only 181 days of service.

The advantages of a VA loan have been noted above. It should be stressed, nevertheless, that a loan with no down payment including no mortgage insurance is a huge huge advantage when purchasing a home. For example, a homeowner who purchases a $200,000 home by means of a FHA insured mortgage will be required to pay approximately $100 a month for the mortgage insurance alone. This will provide the military member with a sizable monthly savings advantage.

 

Many financial institutions require an additional fee for securing a mortgage. A VA loan will also require an additional fee but in most cases it will be lower. It will depend upon the type of veteran and the amount of the down payment. For example, a VA loan that had a $0 down payment would need to pay 2.15% of the total loan amount. If the borrower is able to make a 10% or more down payment then that fee will be reduced to 1.25%. Anyone who receives disability compensation will have the fee waived.

Even though the Veterans Affair does not have a minimum credit score requirement for a VA loan, the private lending institution may. Most lending institutions will require a minimum credit score of 620 for military members. Some financial institutions will even go lower but they will charge a much higher interest rate. To find out all of the pertinent information about VA mortgages and loans, you can do so by searching through a VA loan guideline brochure.

 

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