Home buyers who are military veterans or on active military duty and purchasing a primary residence are eligible to receive a VA home loan. The VA loan program was created in 1944 for help returning military members and their families afford homes. Since the program began, it has helped over 18 million Americans finance the purchase of their home.
The Department of Veterans Affairs (VA) insures mortgage loans, which means that they provide reimbursement to lenders if the borrower is not able to repay the loan. This guarantee gives VA approved lenders the ability to offer completive rates and loan terms for veterans or active military personnel.
VA loans often are very flexible when used in the purchase or construction of a home. Borrowers can use a VA loan to refinance an existing mortgage, take cash out, make home repairs, improve energy efficiency, and more.
It is expected that many military members will have less than ideal credit for obtaining a home loan when they return from service. For example, when a military member is deployed for service abroad, they may have limited access to financial institutions, leaving a negative impact on their credit history if there are any problems.
There are a few factors that lead to a generally lower credit score among military veterans such as little credit history or lack of financial history. The Department of Veterans affairs understands these factors, and VA home loan guarantees are designed to address them. This way, lenders can provide less qualified borrowers home loans with low interest rates.
VA insured loans offer lower down payments than conventional loans and offer relaxed credit requirements. If you have a low credit score for expected reasons, you can still secure a VA loan if you meet the other requirements. The most important factors are payment history and the property you wish to purchase. In general, borrowers who are eligible for VA loans include:
Many borrowers obtain VA loans to purchase homes with no money down. VA loans also have more relaxed underwriting requirements than conventional loans. It has been estimated that 80% of home buyers who received VA loans could not have qualified for a traditional mortgage. Advantages of VA loans include: