Basic Info About VA Loans

If you have served in the United States Military or are the spouse of a veteran, you may be entitled to a guaranteed home loan. These loans offer $0 down payment and can even provide a $0 buyer paid closing costs option too. VA loans are easier to qualify for (when compared to conventional home loans) and have really low interest rates.

In order to qualify for a VA loan, a person must have served active duty for at 181 days. Thanks to an expansion of benefits in 1992, it is now possible for reservists to qualify for the program, provided they have served at least six years of their commitment. If the applicant is older, which is to say old enough to have served before 1975, then it depends on whether he or she was active during certain periods. Some veterans were not, and so may not be eligible for the VA loan benefit. The widows of many qualifying veterans may receive VA benefits as well. A veteran is not eligible if they received a dishonorable discharge.

The United States Department of Veterans Affairs does not offer funding for VA loans, except to qualifying individuals living in more remote areas, or in areas where they may not otherwise find one. The VA basically offers insurance on the mortgage. Whenever a person applies for a loan with a downpayment of less than 20%, that institution typically requires the lender to obtain private mortgage insurance (PMI) as a security. If the borrower falls on financial hard times, then they may use this insurance to help pay what liquidation of the property cannot solve. The VA loan guarantee eliminates the need for PMI as it serves the same purpose. The veteran is thus free from having to pay this insurance, or is otherwise guaranteed a direct loan if private borrowing is not possible. Either way, this means being able to borrow a larger sum of money with greater security than what may be possible according to their salary.

The VA loan benefit may be used to pay for a foreclosure, short sale, REO, condo, house, townhouse, or multi family (1-4 unit income property). The rule is that the property must pass VA appraisal and inspection. These measures will protect the borrower form overpaying for the home and giving the borrower the knowledge that the home is in safe and habitable condition.

The VA program may be used more than once. A down payment may be larger for the second loan. Under normal circumstances, it is necessary to wait at least 24 months after a short sell before you can submit a new VA Loan Application. This gives the government anf the investor a chance to see your developing financial circumstances before taking on the risk of guranteeing or funding a loan. If you have not been able to make your debt payments on time for at least twelve months, then it is too risky to lend or otherwise insure the money. The government standars to borrow money on a VA loan are less strict than a private company, since it is a government program for veterans.

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