11 Things You Should Know About VA Loans
Seventy-three years and twenty-two million veterans later, the VA Home Loan Guaranty program has
seen a record number of loans written in 2017, with more than 740,000 loans guaranteed by the VA.
VA-backed loans are easier to qualify for as they are government-backed; and qualified borrowers
may finance up to 100% of the price of the home.
Here are 11 points about VA loans:
1. Loans are backed by the United States Department of Veterans Affairs (VA) but not funded by
them. The VA reviews and approves all official VA loan providers.
2. VA appraisals (conducted by a VA certified appraiser) are mandatory on homes purchased
with a VA loan.
3. Co-borrowers are not allowed by most VA-approved lenders, unless they are a spouse or
4. Eligible borrowers may purchase a range of property types, from townhomes, modular homes,
condos and single-family, but the VA loan will not cover everything. The residence is required
to be ‘move-in’ ready, not a ‘fixer-upper’.
5. VA loans are not for vacation, second homes or investment homes. The borrower must live in
6. Once an applicant has been granted a VA-backed loan, they may obtain another loan if the
existing one has been paid off. In some cases, depending on individual circumstances, a
borrower may qualify to secure another VA loan even if they’ve declared bankruptcy or gone
into foreclosure with a previous one.
7. The VA promises to repay around 25% of every loan it guarantees in the event the borrower
defaults. This allows VA-approved lenders room to offer service members better rates and
8. VA loan borrowers do not have to pay Private Mortgage Insurance (PMI). PMI is a monthly
expense, typically required with other loan types when a borrower puts down less than 20%.
9. There is a funding fee. This directly funds the VA to ensure that future generations of military
homebuyers have access to the program, without placing additional financial burdens on
veterans and taxpayers. The funding fee is often rolled into the loan, and is normally 2% of the
loan amount. This fee may be waived for veterans with service-related disabilities.
10.There is no prepayment penalty.
11.No additional underwriting is required with streamlined refinancing
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