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VA Loans
VA Loans
A Veteran's Affairs Loan (VA) helps veterans to finance a home, home improvement, or refinance a home with favorable terms and interest rates that are more competitive than conventional loan types. A VA Loan acts much like an FHA Loan in that it guarantees payment to lenders in the event of a foreclosure. However, with a VA Loan there is stricter qualification criteria and more favorable terms and benefits. To qualify for a VA Loan:
- One must be an eligible veteran with entitlement to securing a mortgage. An eligible veteran is defined as a member of the Selected Reserve (National Guard or Army Reserves) with 6 years of active duty, an active duty personnel (must be active for at least 90 days) or be one of a certain category of spouses.
- The loan must be for an eligible home purchase, home improvement or home refinance. Also, the loan amount can't exceed the property's value.
- The borrower must occupy the property as a primary place of residence for a reasonable amount of time following the close of the loan.
- The borrower must meet income requirements for repaying the loan, maintaining the home, etc.
- The borrower must have an acceptable credit rating.
- No down payment.
- A negotiable fixed interest rate lower than current market rates.
- Information regarding the value of the property.
- Caps on closing costs.
- Long amortization terms (amount of time the loan must be repaid).
- No prepayment penalties.
- Ability to forebear for temporary financial difficulty.