VA Guaranteed Home Loans
Is There a Program to Help Veterans Purchase a Home?
Yes. The U.S. Department of Veterans Affairs has a Guaranteed Home Loan program that can help veterans purchase a home.
Does this Program Provide Loans to Veterans?
No. The VA does not provide loans. This program provides loan guarantees. Veterans who wish to use this program will have to find a lender (i.e. bank, credit union, etc.) that is willing to provide them a mortgage.
What is a Loan Guarantee?
A loan guarantee is a commitment on behalf of the VA to purchase the property from the lender if the veteran defaults on the loan. A loan guarantee is attractive to lenders, as they know if the veteran defaults they will still receive payment on the loan.
What is the Primary Benefit of Using this Program?
The benefit of a VA Guaranteed Loan is that you can usually purchase a home without a down payment. There will still be closing costs and other fees due at signing, but you won’t have to have the traditional 20% down payment. Without the VA guarantee, you would normally have to pay extra for mortgage insurance if you purchased a home without a down payment.
Does it Cost Anything to Use This Program?
Yes and No. Disabled veterans can use the VA Guaranteed Loan program for free. Veterans without disabilities, however, must pay a funding fee. The funding fee varies depending on the circumstances, but it can add thousands of dollars to the cost of the home. For example: a veteran purchasing a $200,000 home with no down payment would have to pay a 2.15% funding fee, which results in a charge of $4,300. This charge can be included in the mortgage payments, but these payments will be higher as a result.
Is a VA Guaranteed Loan Always the Best Option?
No. Veterans must weigh all the options to consider what is best for them and their family. This program gives veterans more options, not less. Veterans may find it is more economical to purchase a home without using this program.
How Do I Use This Program?
Purchasing a home can be hectic… opportunities sometimes arise unexpectedly. Ideally, however, below are the traditional steps for using this program.
Apply for a Certificate of Eligibility
As soon as you think you may want to purchase a home, apply for a “Certificate of Eligibility” from the VA that shows you are eligible to use this program. You can request a “Certificate of Eligibility” directly from the VA, as it is one of their easiest applications. You can apply online, or call them and ask them to send you the forms. If you are eligible for the program, you can expect to receive your certificate in 2 - 3 weeks.
VA Home Loan Program (800) 827-6311
Find a Lender that Accepts VA Guaranteed Loans
After you have your “Certificate of Eligibility”, shop around for a lender you’d like to use. Not all lenders will accept VA Guaranteed Loans, so ask them up front if they do. Pick whichever lender you are most comfortable with based on price and customer service. Remember… you will likely have a long term relationship with this lending institution, so pick one that you’ll be happy with.
Find a Property to Purchase
After you have the “Certificate of Eligibility” and a lender willing to work with you, start looking for a property to purchase. When you find one this is right for your family, work with your lender to finalize the deal.