Your Complete Guide to VA Home Loans

What is a VA loan?

VA loans are made by private lenders, such as mortgage companies and banks, not by the Department of Veterans Affairs.

VA home loans can be used for a single-family home, condo, multi-unit building, manufactured home, or new construction and offer competitive interest rates and terms.

Basic Process

A VA mortgage is a specific home loan product, but the home-buying process with it is similar to any other type of mortgage. You'll work with a qualified lender to get pre-approved, buy the home, make an offer, go through the underwriting and appraisal process, and finally close the loan.

Aside from benefits like a $0 down payment and no mortgage insurance, the most significant difference with VA loans is that the lender will need to verify your eligibility for a VA loan, an item the lender typically does. The source is done internally. Learn more about the VA loan application process here.

If you're ready to start your VA loan, check your eligibility, or have VA loan-specific questions, speak with a Veterans United Home Loan Specialist today.

VA Loan vs. Conventional Mortgage

The federal government created the VA Home Loan Program to make buying a home easier for those who serve our country. This benefits program offers the most potent loan option on the market. Veterans who meet specific requirements can buy with no down payment, no mortgage insurance, lenient credit requirements, and the lowest average fixed rates in the business.

Types of VA Loans

The VA loan benefit offers qualified veterans several powerful home financing options.

VA Purchase Loan

Veterans and service members can use a VA loan to purchase a new or existing home with a down payment of $0. VA purchase loans allow veterans to buy single-family homes, condominiums, manufactured homes, multi-unit properties (duplexes), and even new construction.

Policies and guidelines may vary by lender. Some lenders might only provide some of these VA purchase loan varieties.

Go IRRR

The VA Interest Rate Reduction Refinancing Loan (IRRRL) is one of two refinancing options in the VA loan program and is chosen by most experienced homeowners.

They're also known as VA Streamlines, and that's because they're simple, low-cost refinancing loans that, in some cases, don't require credit underwriting, income verification, or appraisals.

VA IRRRL is only for veterans who currently have a VA loan. Your new rate must be lower than your old rate, and there is a limit on how long it takes to recover costs and fees. All of this helps ensure that veterans receive total financial benefits.

VA Cash Out Refinancing

Qualified homeowners can refinance their mortgage and take cash out of their equity with a VA Cash Out Refinance. Veterans with or without outstanding VA loans are eligible for these loans. Eligible homeowners can refinance up to 90 percent of their home's value.

Loan guidelines and loan-to-value requirements may vary by lender. Homeowners are not required to take out cash on these loans, which means veterans with non-VA mortgages can use this option as a prime rate and term refinance.

VA Energy Efficiency Mortgage

VA allows veterans to borrow additional money for home energy efficiency improvements, either as part of a home purchase or as a refinance.

Veterans can finance up to an additional $6,000 to cover the cost of qualified improvements, such as heated or storm windows, heat pumps, and solar heating and cooling systems. Appliances, window air conditioners, and other non-permanent additions are not permitted under this option for homeowners.

VA Loan Search

The VA Loan Program has helped generations of veterans, service members, and military families achieve the dream of home ownership. The promise at the center of this benefit is that veterans have access to a home loan program with flexible guidelines and significant financial benefits—basically no down payment—in exchange for their selfless service to our country.

Let's look at how VA loans work and what goes into starting the VA loan process.

Who Created the VA Loan Program?

The United States government established VA Home Loans in 1944 to assist returning service members in buying homes without a down payment or excellent credit. More than 25 million VA loans have been secured by this illustrious program, helping veterans, active duty service members, and their families in purchasing or refinancing homes.

What is a VA guarantee?

Although VA loans are federal, the government does not typically pay veterans directly. Instead, private lenders, including Veterans United Home Loans, finance the loan, while the Department of Veterans Affairs guarantees.

This guarantee protects the lender from a total loss if the buyer defaults, incentivizing private lenders to offer VA loans on better terms than other mortgage options.

What are VA loan limits?

Eligible veterans can borrow as much with their full VA loan eligibility as the lender is willing to extend, all with no down payment. VA loan limits apply only to buyers with less than full eligibility, either because they have one or more active VA loans or lost a previous loan to foreclosure.

What is the VA funding rate?

VA funding fees go directly to the VA to ensure the program continues to work for future generations of veteran and military homebuyers by removing any additional burden on taxpayers and veterans.

 For example, if you use the VA home loan program for the first time, the financing fee is typically 2.3 percent of the home's purchase price. For later use of your VA loan benefit, the cost is 3.6 percent. The interest rate reduction refinances loan fee is just 0.5 percent, no matter how often you use the help.

VA borrowers can roll the financing fee toward the total loan amount. The VA also limits closing costs for veterans and allows sellers to pay most or all. Many of our borrowers buy homes with no down payment at closing, but every buyer's situation differs.

VA also completely waives funding fees for some veterans and surviving spouses. The most common exemption is for veterans who receive service-connected disability compensation. Only the VA can determine funding fee waivers.

To calculate your VA financing rate, use the Veterans United Home Loan Financing Rate Calculator here.

Is a VA loan a good option?

VA loans are the most potent loan option on the market. They have significant benefits, including $0 down payments, no mortgage insurance, flexible and forgiving credit guidelines, and the industry's lowest average fixed interest rates.

Every experienced homebuyer's situation is different, and going over your loan options with a home loan specialist can help ensure you make the best financial decision.

How do VA loans work in today's real estate and mortgage environment?

Today, VA mortgages are more critical than ever. Due to the Great Recession, dozens of veteran and military buyers find it increasingly difficult to get home financing. VA loan use has increased over the past 15 years. The VA supported a record 1.4 million loans in the fiscal year 2021.

VA loans help veterans and service members become homeowners without years of building great credit or saving for a significant down payment. They have been a lifesaver, especially for small home buyers. Nearly eight decades after its inception, this well-earned benefits program still serves its original purpose.

How do I get a VA loan?

Talk to a trusted lender who knows VA loans and how to maximize that hard-earned benefit. The process usually starts with pre-approval, often done in minutes using your phone, laptop, or tablet.

A loan pre-approval is essential before making an offer on your dream home. This pre-approval letter gives you a clear idea of your purchasing power and shows sellers and listing agents you have what it takes to close.

Can I use a VA loan again if I have used it?

Yes, this is not a unique option. Once you take advantage of a VA loan, it's yours for life. You can use a VA loan repeatedly, and having more than one VA loan active simultaneously is possible.