If you are a veteran interested in buying a home, you simply can’t afford to ignore the VA home-financing program. Some benefits include reduced interest rates and fees, 100% financing available, and no down payment.
VA housing assistance can help Veterans, service members, and their surviving spouses to buy a home or refinance a loan. The VA also offers benefits and services to help you build, improve, or keep your current home.
VA-backed Veterans home loans
VA direct and VA-backed Veterans home loans can help Veterans, service members, and their survivors to buy, build, improve, or refinance a home. You’ll still need to have the required credit and income for the loan amount you want to borrow. But a Veterans home loan may offer better terms than with a traditional loan from a private bank, mortgage company, or credit union. For example, nearly 90% of VA-backed loans are made with no down payment. Learn about our different loan programs—and how to apply.
VA Direct Home Loan
With a VA direct home loan, The VA serves as your mortgage lender. This means you’ll work directly with the VA to apply for and manage your loan. The Native American Direct Loan (NADL) program often has better terms than a home loan from a private lender (a private bank, mortgage company, or credit union).
VA-Backed Home Loan
With a VA-backed home loan, the VA guarantees (or stands behind) a portion of the loan you get from a private lender. If your VA-backed home loan goes into foreclosure, the guaranty allows the lender to recover some or all of their losses. Since there’s less risk for the lender, they’re more likely to give you the loan under better terms. In fact, nearly 90% of all VA-backed home loans are made without a down payment.
Lenders follow VA standards when making VA-backed home loans. They may also require you to meet additional standards before giving you a loan. These standards may include having a high enough credit score or getting an updated home appraisal (an expert’s estimate of the value of your home).
Getting a VA backed loan is easy. Follow these five simple steps when purchasing a home, and enjoy the benefits of your service in the military:
- determine if eligible
- sign a purchase agreement
- order VA appraisal
- apply for mortgage
- purchase home
Service members and veterans who decide to buy a house are eligible for a home mortgage guarantee offered by the Department of Veterans Affairs. The VA does not provide the mortgage, rather, it guarantees the mortgage, which minimizes lenders’ risks and reduces their losses in the event of foreclosure. The money comes from private lenders who volunteer to participate in the VA program. Because of the guaranty, lenders are willing to offer mortgage loans larger than what service members otherwise might qualify for.
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 Army veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether you used some entitlement previously.
With the current maximum guaranty, as of January 1, 2017, an Army veteran who hasn’t previously used the benefit may be able to obtain a VA backed loan up to $424,100 depending on the borrower’s income level and the appraised value of the property. Your local VA office can provide more details on guaranty and entitlement amounts.
VA Home Loan Limits
If you have remaining entitlement for your VA-backed home loan, find out the current loan limits and how they may affect the amount of money you can borrow without a down payment. As of 2020, if you have full entitlement, you don’t have a VA loan limit.
If you have full entitlement, you don’t have a home loan limit
Eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you won’t have to pay a down payment, and we guarantee to your lender that if you default on a loan that’s over $144,000, we’ll pay them up to 25% of the loan amount.
You have full entitlement if you meet any of these requirements. At least one of these must be true:
- You’ve never used your home loan benefit, or
- You’ve paid a previous VA loan in full and sold the property (in this case, you’d have your full entitlement restored), or
- You’ve used your home loan benefit, but had a foreclosure or compromise claim (also called a short sale) and repaid us in full
Note: You may have heard the terms additional entitlement, bonus entitlement, or tier 2 entitlement. We use these terms when we communicate with lenders about VA-backed loans over $144,000. You won’t need to use these terms when applying for a loan.
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 entitlement.