VA loans are available to the more than 25 million veterans as well as certain other eligible people. This program was begun by President Franklin Roosevelt when he signed the G.I. Bill of Rights. The program was designed so veterans and their families could realize the American dream of owning a home. Depending on the market, the VA loan is often the most attractive and carries advantages, such as no money down and a low interest rate.
Eligibility for VA Loans
Active duty veterans, honorably discharged veterans with 90 days of serving during a war or at least 181 days of continuous service in times of peace are eligible. If the veteran was enlisted and started service after September 1980 or became an officer after October 16, 1981, there is a requirement of two years of service. For National Guard or reservists, there are other rules, including a requirement of six years of service.
The veteran must provide a certificate of eligibility before the loan processing can begin. The certificate can be obtained and filled out online. Proof of military service and eligibility will also be required.
Widows of veterans who have not remarried are eligible for the VA loan. However, if they have remarried to a non-veteran, they are no longer eligible.
VA Loan Guarantee
The guarantee on the loan states the home must be occupied by the veteran, and it protects the lender if the owner defaults on the loan. This guarantee enables veterans to borrow up to 100 percent of the value of the home, while the lender is still protected.
Lenders of VA Loans
Banks, mortgage companies and private lenders may make loans guaranteed by the VA as long as the criteria are met. The lenders are responsible for qualifying the veterans based on income, expenses, credit and debt-to-income ratios.
Joint or Cosigned VA Loans
Loans made by the qualifying veteran and his or her non-veteran spouse may be cosigned and still have the full VA guarantee. If a cosigner is not a veteran or spouse, the VA may not guarantee the full loan. Only the veteran's interest in the property will be guaranteed by the VA.
Additional VA Loan Facts
Interest rates may vary, according to each lender, so it is advisable to shop around. The only closing cost that is charged by the VA is one-half percent of the loan for a funding fee, which may be included in the loan. The borrower may not get cash back from the proceeds of the loan. The only time a veteran can refinance with a VA loan is if the existing loan is through the VA.
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