VA Advantage - Guaranteed Home Loans for Veterans |
More than 29 million veterans and service
personnel are eligible for VA financing. Even though many veterans have
already used their loan benefits, it may be possible for them to buy
homes again with VA financing using remaining or restored loan
Before arranging for a new mortgage to finance a home purchase, veterans
should consider some of the advantages of VA home loans
1. Most important consideration, no down payment is required in most
2. Loan maximum may be up to 100 percent of the VA-established
reasonable value of the property. Due to secondary market requirements,
however, loans generally may not exceed $203,000.
3. Flexibility of negotiating interest rates with the lender.
4. No monthly mortgage insurance premium to pay.
5. Limitation on buyer's closing costs.
6. An appraisal which informs the buyer of property value.
7. Thirty year loans with a choice of repayment plans:
a. Traditional fixed payment (constant principal and interest; increases
or decreases may be expected in property taxes and homeowner's insurance
b. Graduated Payment Mortgage--GPM (low initial payments which gradually
rise to a level payment starting in the sixth year); and
c. In some areas, Growing Equity Mortgages-GEMs (gradually increasing
payments with all of the increase applied to principal, resulting in an
early payoff of the loan).
8. For most loans for new houses, construction is inspected at
appropriate stages to ensure compliance with the approved plans, and a
1-year warranty is required from the builder that the house is built in
conformity with the approved plans and specifications. In those cases
where the builder provides an acceptable 10-year warranty plan, only a
final inspection may be required.
9. An assumable mortgage, subject to VA approval of the assumer's
10. Right to prepay loan without penalty.
11. VA performs personal loan servicing and offers financial counseling
to help veterans avoid losing their homes during temporary financial
WHAT IS A VA-GUARANTEED LOAN?
These loans are made by a lender, such as a mortgage company, savings
and loan or bank. VA's guaranty on the loan protects the lender against
loss if the payments are not made, and is intended to encourage lenders
to offer veterans loans with more favorable terms. The amount of
guaranty on the loan depends on the loan amount and whether the veteran
used some entitlement previously. With the current maximum guaranty, a
veteran who hasn't previously used the benefit may be able to obtain a
VA loan up to $203,000 depending on the borrower's income level and the
appraised value of the property. The local VA office can provide more
details on guaranty and entitlement amounts.