About VA Home Loans

Overview

The Department of Veterans Affairs (VA) provides many services to those who served in the armed forces. This includes services for wounded soldiers, children of veterans of foreign wars, and veterans who received an honorable discharge. The VA Home Loan is offered to eligible veterans who are purchasing a home.

VA Home Loan Eligibility

Veterans who served on or after September 16, 1940, may be eligible for a VA Home Loan as long as they were not dishonorably discharged. Eligibility varies among the various wartime and peacetime efforts. Veterans applying for the VA Home Loan are required to complete a Certificate of Eligibility. A copy of the DD Form 214 must be submitted with the Request for a Certificate of Eligibility (VA Form 26-1880).

VA Home Loan Down Payment

While conventional and other loans often require a 10 to 20 percent down payment, no down payment is required for a VA loan. This is because the loan is federally insured and there is no loss to the lender in the event of a foreclosure, deed in lieu of foreclosure, or other agreement where the home is lost and the loan is not fully repaid. Even though a down payment is not required, putting a payment down on the loan can lower the monthly mortgage payments.

VA Home Loan and Foreclosure

VA advisers will offer the borrower assistance during the process of foreclosure and will sometimes act as an intermediary. In the event of a foreclosure or other similar agreement, the federal government pays the balance of the loan to the lender. This releases the VA loan borrower from any debt remaining on the VA home loan. After the lender receives the funds, neither the lender nor the VA will contact the borrower for payment of debt.

Subsequent VA Home Loan Eligibility

Veterans may be eligible for subsequent VA home loans. They may request a Certificate of Eligibility if the previous VA home loan has been paid in full and the property disposed of. If the property owner keeps the property and the VA loan is paid in full, he may receive another Certificate of Eligibility only once. The property must be disposed of and the loan paid in full in order to receive any further Certificates of Eligibility.

Foreclosure and Subsequent Loans

Whether it is with the original borrower or someone who assumed the loan and was foreclosed upon afterward, foreclosure on a VA home loan is a financial loss for the federal government. The borrower will not be eligible for restoration of the used home loan eligibility amount for any subsequent VA home loans unless the original loan is paid in full. The veteran may, however, be eligible to receive the unused portion of the VA home loan eligibility. A down payment may be required.