What is a VA loan? ​

Like FHA loans, VA loans are government loans. VA loans are backed by the U.S. Department of Veterans Affairs and are available to active duty service members, honorably discharged veterans, and surviving spouses. The biggest benefits are that no down payment is required and you don’t have to pay mortgage insurance. They also have some more lenient loan standards then a conforming conventional mortgage.

Who qualifies for a VA loan?

In order to qualify for a VA loan, you must meet the following requirements.

• Be an active duty or retired military service member, or the surviving spouse of a deceased veteran.
• Have a Certificate of Eligibility (COE) that shows you meet the military requirements.
• No minimum credit score (however, lenders typically look for a score above 620).
• Property must be a primary residence

VA loan pros

• No down payment required – VA loans offer No down payment required (100% financing) which means that you only need to take care of the closing cost fees at closing. Not having to save for a down payment means that you can afford your home sooner.
• Faster appraisals – sometimes, the part of the loan which takes the longest, is the appraisal. Rather than wait weeks for an appraisal to come in, VA loans have specialized appraisers that get appraisals in in two weeks or less.
• No mortgage insurance – because the loan is backed by the VA, they do not require mortgage insurance on your loan.
  Better interest rates – the VA offers better terms and interest rates that most other home loans.

VA loan cons

• VA funding fee required – While VA loans don’t require mortgage insurance or a down payment, they do require a one time VA funding fee (unless the veteran is a veteran, exempt from the VA funding fee) which lowers the cost of the loan for tax payers.
• Only available on primary properties – While you can get FHA or conventional loans on other types of properties, VA loans are solely available on primary properties.
• Your loan could exceed the market value of your house – When getting a VA loan, you should compare the total cost of the loan, including the VA funding fee, with the market value of your house. Because the VA funding fee can be rolled into your loan, your loan amount could end up being more than the market value of your house.