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A VA mortgage is a type of loan that is guaranteed by the US Department of Veteran's Affair (VA). The purpose of this loan is to provide home financing to eligible, current, retired servicemen and servicewomen as well as members of the National Guard and Coast Guard who would otherwise encounter difficulties through a conventional loan.

The VA loan is one of the best lending products in the market. Not only are they guaranteed by the VA but they also provide 100% financing. This means that with a VA loan, a borrower does not need to put down any money towards the down payment or closing costs. There is a "funding fee", which is a type of mortgage insurance but it is a one-time only, upfront and can be financed into the loan amount. Considering a VA loan for mortgage financing? Read the following bullet points below!

What types of loans offered by the VA?

  • Purchase loans.
  • Interest Rate Reduction Refinance Loan (IRRL). A special type of streamline refinance.
  • VA cash out refinances. 
  • Native American Direct Loans. Provide financing for eligible Native American veterans for purchase, construction or improvement of homes in protected Native American land.

What are the advantages of acquiring a VA loan? 

  • 100% financing for both purchase and refinance.
  • IRRL's are streamline rate/term refinances that do not need appraisals 
  • Best option for eligible borrowers who may have difficulties qualifying for a conventional mortgage
  • High loan limits. This varies in some states but the highest loan limit of some VA loans is actually higher than on a conventional loan
  • No mortgage insurance required. The funding fee is upfront and rolled into the mortgage
  • Funding fee is waived for disabled vets. 
  • Surviving spouses can qualify for a VA loan. 

What are the disadvantages of a VA loan? 

  • Eligibility is limited to enlisted and veterans. 
  • The funding fee can be expensive depending on the loan amount. Currently, it is 2.15% of the loan amount. 
  • VA loans are only for principal residences. No allowed for second homes or investment properties. 
  • Spouse can be the only co-borrower allowed on a VA loan.

For more questions about the VA loan, or to find out if you qualify, visit me here!


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