There are now more than 19 million veterans and active service members in the US today. As an appreciation for their sacrifices and services, veterans and US service members have access to awesome perks and benefits from the government, including loans.
In this article, you will learn the basics of VA loans and the different types available. This article also discusses the minimum qualifications and requirements you will need.
VA Loans: What Are They?
A VA loan is a low- to no-down payment financing option offered only to eligible veterans and active service members and their families. All VA loans are backed by the US Department of Veterans Affairs and are issued by local private lenders such as Security America Mortgage.
This means that the Department of Veterans Affair doesn’t issue the loan, but instead partner with these lenders so that veterans, service members, and their families can access this special benefit. The Department of Veterans Affairs sets a percentage guarantee for every VA loan, ensuring lenders that a portion of the loan will be paid in case the borrower can’t make payments. This assurance minimizes the risk for lenders, making it possible for them to provide favorable loan terms to borrowers.
You can complete the VA loan application process through your preferred lender. Take note that while numerous lenders are offering VA loans, only a few are specialized in serving VA loan borrowers. For instance, Security America Mortgage specializes in offering common VA loans including home loans and construction loans. To know more about their services, visit their website at securityamericamortgage.com.
Types Of VA Loans
The VA offers various home and refinances loan options to eligible borrowers. These include:
1. VA Home Purchase Loan
This is a standard mortgage for veterans and active service members that’s backed by the VA. It allows a borrower to purchase properties with no down payment. When you qualify for one, you can secure better terms than you would from a conventional mortgage issued by private lenders.
2. VA Renovation Loan
This type of loan helps fund a renovation project and other costs of home improvements. Unfortunately, only a few lenders provide this loan option.
3. VA Cash-Out Refinance
This type of VA loan allows you to take up to 100% of your home’s equity to pay off debt and education expenses, to name a few. Since it allows you to use it toward home improvements, this type of loan can help you access more of your home’s value and enjoy greater borrowing power than traditional FHA refinance.
4. VA Interest Rate Reduction Refinance Loan (IRRRL)
VA IRRRL or also known as VA streamline refinance loan can help in reducing your monthly mortgage payments on existing home loans by lowering your interest or switching to a fixed-rate mortgage which ensures greater stability in terms of predicting the regular amount of cash to paying off your home loan.
Are You Eligible? Qualifications For VA Loans
In general, you may qualify for a VA loan if you meet one or more of the following:
• You completed 90 days of active-duty service
• You served a minimum of 181 days of active service during peacetime.
• You rendered service for six years in the National Guard or reserves
• You have 90 cumulative days of active service under Title 32 or Title 10. For the former, at least 30 of those days should be consecutive.
• You are the spouse of a deceased service member due to service-related disability or while serving.
If you are discharged from the military, eligibility will depend on the discharge category. You may still qualify if you were discharged for:
• A medical condition or disability you get during active service
• A reduction in force
• Hardships
• The convenience of the government
• Early out and served 21 months or more of a 2-year enlistment
That said, if you did not serve long enough or were dishonorably discharged, you may not be eligible for a VA loan.
How To Verify Your Eligibility?
To verify your eligibility for a loan, you need a Certificate of Eligibility (COE) which is provided by the VA. This document proves that you have qualified military service as well as shows your VA Loan Entitlement Code and other standards, such as whether or not you should pay the VA funding fee.
Lenders need this document to verify if you meet the minimum requirement to qualify for a loan. You can apply for this certification online or by mail. Also, your VA lender can pull it out for you using your social security number and date of birth.
VA Loans Top Takeaways
VA loans are amazing programs that numerous borrowers wish they had access to but are exclusively reserved for the veterans and honorable service members of different branches of the US military. Whether you’re a veteran or the spouse of an active service member, we hope that this guide has provided you with insights into the different types of VA loans available to you.
