How to Get a Veteran Affairs Home Loan

Wednesday, September 14, 2011 11:22am
Veteran saluting American flag
For individuals who have served in the military, there are additional benefits to help in financing a mortgage. The Veteran Affairs (VA) Home Loan Program is a government service that puts veterans in the homes they need by offering financial assistance.

To be eligible for the program, a borrower must be a veteran, in active duty or a reservist or National Guard member. In addition, surviving spouses of members of the military who have died on active duty or as the result of a service-related disability are eligible, as well as some spouses of servicemen or women on active duty who are missing in action, captured or detained.

Under the program, a veteran can obtain a home loan without paying a down payment and does not need to buy private mortgage insurance. The service also can limit closing cost charges and can even facilitate a closing cost paid by the seller. Finally, if after obtaining the mortgage the veteran has trouble making the payments, he or she may be eligible for assistance from VA.

VA home loans are helpful for veterans who need extra help, but penalties for bad credit or insufficient income are still present; a veteran still must qualify for the loan.

As far as the size of the home loan for which a veteran may receive, there is no specific loan limit; however, there are limits on the liability that VA is permitted to assume on the veteran’s behalf. As a result, the loan amount is determined based on the veteran’s income.

The VA does charge a funding fee for the loan, although this cost can often be folded into the loan and some veterans may be exempt – such as those who receive a disability payment for a service-related injury. Veterans with VA loans will also need to pay interest over time, as with any home mortgage.

To apply for a VA home loan, a veteran first needs to find a real estate agent and a lender to work with that support the program. A certificate of eligibility is available online or in hard copy form. Finally, after finding a home to purchase, the veteran must ensure that the sales agreement includes a VA option clause, apply to the lender for the loan and go through the sale process.