VA Loans Guide

The Department of Veteran Affairs has a program that offers a home loan what is known as a VA loan. VA loans provide immense benefits to veterans. If you need housing assistance but have few means, then these loans can give you what you need. Many VA loans serve different functions, depending on your needs for housing. 

VA loans are versatile since they can help veterans or active service members build or renovate a home. A VA home loan can give you what you need if you qualify. If you want to learn more about a VA home loan, then continue reading the sections below.

What is a VA Loan?

A VA loan is a government loan provided to individuals who have served the U.S. Military. The Veterans Administration will provide home assistance to servicemembers, veterans and qualifying surviving spouses. Every home loan from the VA serves a different purpose. For instance, certain home loans can help veterans build and repair their current homes.

If you qualify, the VA home loan has special features specific to the program. For example, when you have filed for bankruptcy or foreclosure, you can receive a home loan from VA after a two-year waiting period. Many loan programs will require borrowers to wait three or four years before they can qualify for another loan. While reviewing the various loans from Veterans Affairs, you will find that they fall into two categories which are further explained below.  

VA-Backed Loan

This type of VA home loan is guaranteed by the Department of Veterans Affairs. Thus, instead of providing the loan directly from the office, the department will approve a loan from a VA-approved lender. When you find a VA-approved lender, the department with guarantee a portion of that loan. This decreases the risk for the lender, therefore providing the loan on better terms. Additionally, almost 90 percent of VA-guaranteed home loans are completed without a down payment. 

Once you are found eligible for a VA-backed loan, you can also find out how much money you are approved for in your loan terms. This is possible with a VA loan calculator. There are several VA calculators out there that can answer different questions. These calculators can make your home loan decision simpler just by providing an estimate of what you would pay every month.

VA Direct Loan

This VA loan will have the department serve as your lender directly. You will work with them to apply for and manage the loan. There is only one loan that falls under this category and that is the Native American Direct Loan (NADL) program. Like other loans from this department, this loan will provide better VA home loan rates than would borrowing from a private lender. 

The NADL is a loan that allows veterans or spouses of Native American veterans to obtain a home loan. The loan can be used in different ways such as:

  • Buying a home
  • Renovating a home
  • Building a home

The program helps qualifying members do any of these actions on Federal Trust land. You may also get a loan to refinance a NADL you already have which can reduce your interest rate.

VA Home Loan Eligibility

There are three specific VA loan requirements you must meet to be considered eligible. The VA will review your length of service, your duty status and character of service. Meeting these requirements will earn you the Certificate of Eligibility (COE) but not the loan. For this reason, other financial determinants will come into play. Some of these factors are:

  • Debt-to-income ratio
  • Income verification
  • Credit score

Moreover, the perks of a VA home loan mean that you do not have to pay a PMI. A PMI, or private mortgage insurance is required when you make a down payment less than 20 percent of the purchase price. 

If you are the surviving spouse of veteran, you will go through a different process for the COE. You are considered a surviving spouse when your military spouse:

  • Died in service or disability relating to military service
  • Was missing in action or prisoner of war for at least 90 days
  • Was considered continuously totally disabled for a certain period and eligible for disability payments

How to Apply for a VA Loan

The method of applying for a VA loan will be dependent on the loan that you apply for. Certain loans do not require a COE while others do, which affects eligibility requirements and how to go about applying. However, all loans do require meeting the military service requirements. 

Furthermore, there are three ways you may apply for a home loan: online, directly through your lender or by mail. Applying online is the fastest way to send your application for a COE and get your VA home loan.

You must create an account in the eBenefits portal and input all the information and documentation necessary. When applying through your lender, you will likely apply online through the lender’s online system that will process the application. 

The last method of application is via mail. If you have a computer and printer, you may download and print the form. You may also contact your local VA office to receive a copy of it in the mail. Note that you will have to provide a hard copy of any requested materials.