If you’re a U.S. military member or veteran, you may have heard of a special loan available to help military personnel purchase homes. But what exactly is a VA loan?
A VA loan – short for Veterans Affairs loan – is intended to make it easier for veterans and military service personnel to obtain a mortgage. The loans are made through private lenders such as banks and credit unions, and are guaranteed, or backed, by the U.S. Department of Veterans Affairs. Since the inception of the VA loan program in 1944, more than 25 million VA loans have been guaranteed by the government.
VA loans are available to honorably discharged military veterans and active-duty military members, as well as members of the Reserves and National Guard. Surviving spouses of military veterans who died in the line of duty, or from a service-related injury, may also be eligible.
The main branches of the military that are eligible for VA loans include the Air Force, Army, Coast Guard, Marines, and Navy, however you may still be eligible if you served as a Public Health Officer, or Officer of the National Oceanic & Atmospheric Administration. Those who served as Cadets at the United States Military, Air Force, or Coast Guard Academy may also be eligible, as are those who served as a Midshipman at the United States Naval Academy.
To qualify for a Certificate of Eligibility (COE), you’ll have to have served for a minimum amount of time, depending on your service type:
If you’re considering a VA loan, you should keep in mind that it does require a one-time funding fee. The amount of the fee will vary, depending on the size of your down payment (if you’re making one), and the type of military service completed. It’s also worth mentioning that VA loans can only be used to finance or refinance a primary home. In other words, the loan cannot be used for vacation homes or investment-only properties.
Here are some additional benefits of VA loans:
A VA loan – short for Veterans Affairs loan – is intended to make it easier for veterans and military service personnel to obtain a mortgage. The loans are made through private lenders such as banks and credit unions, and are guaranteed, or backed, by the U.S. Department of Veterans Affairs. Since the inception of the VA loan program in 1944, more than 25 million VA loans have been guaranteed by the government.
VA loans are available to honorably discharged military veterans and active-duty military members, as well as members of the Reserves and National Guard. Surviving spouses of military veterans who died in the line of duty, or from a service-related injury, may also be eligible.
The main branches of the military that are eligible for VA loans include the Air Force, Army, Coast Guard, Marines, and Navy, however you may still be eligible if you served as a Public Health Officer, or Officer of the National Oceanic & Atmospheric Administration. Those who served as Cadets at the United States Military, Air Force, or Coast Guard Academy may also be eligible, as are those who served as a Midshipman at the United States Naval Academy.
To qualify for a Certificate of Eligibility (COE), you’ll have to have served for a minimum amount of time, depending on your service type:
- 6 years for members of the Reserves and National Guard
- 2 years for regular service members
- 181 days of active duty during peacetime
- 90 days if currently on active duty
- 90 days of active duty during wartime
If you’re considering a VA loan, you should keep in mind that it does require a one-time funding fee. The amount of the fee will vary, depending on the size of your down payment (if you’re making one), and the type of military service completed. It’s also worth mentioning that VA loans can only be used to finance or refinance a primary home. In other words, the loan cannot be used for vacation homes or investment-only properties.
Here are some additional benefits of VA loans:
- They commonly have more lenient credit requirements compared to traditional mortgages
- They typically have very competitive interest rates
- A VA loan can be paid off early without any financial penalties
- They can be used to purchase 1- to 4-unit properties, as well as VA-approved condominiums
- Refinancing options are available for existing VA loans