What is a VA Loan?
Through the original Servicemen’s Readjustment Act, also known as the GI Bill of Rights, the VA Loan became known in 1944. President Franklin D. Roosevelt signed the GI Bill into law and provided veterans with a federally guaranteed home with no down payment.
Designed to provide housing and assistance for veterans and their families, the dream of home ownership became a reality for millions of veterans. The GI Bill gave more than any other program in history to the welfare of veterans and their families. Also, it contributed greatly to the growth of the nation’s economy.
More than 25.5 million veterans and service personnel are eligible for VA financing. There are many advantages to this loan.
Eligibility for a VA Loan
To be eligible for the VA loan Veterans must have served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. If the veteran enlisted and began service after September 7, 1980, or was an officer and began service after October 16, 1981, there is a two-year requirement. For National guards and reservists with certain criteria, there is a six-year requirement. Also, there are specific rules concerning the eligibility of surviving spouses.
VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, limiting the maximum loan amount to $417,000. Normally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program.
What is the VA Guaranty
VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy.
If you or a later owner fails to repay the loan, the guaranty means the lender is protected against loss. The guaranty also replaces the protection the lender receives by requiring a down payment allowing you to obtain favorable financing terms.
To find out more information about what a VA Loan can do for you, contact a VA Loan Specialist by filling out our 1 Minute Quote Request