The Veteran Administration (VA) Loan was initiated in 1944 under the Servicemen's Readjustment Act—more commonly known as the GI Bill. Signed into law by President Roosevelt, the VA loan was (and is) designed to provide Veterans with a federally guaranteed (protected against loss if the loan defaults) home loan with no down payment. VA loans are provided by private lenders such as banks and mortgage companies to eligible Veterans for the purchase of a homes.
Since the VA mortgage loan is guaranteed, lenders typically offer a lower interest rate, better terms, and reduced closing costs than a conventional home loan. VA home loans are available in all 50 states. A VA loan may also have reduced closing costs and no prepayment penalties.
Who is eligible for a VA Loan?
Veterans who served at least 90 days and were not dishonorably discharged or those who served less than 90 days who were discharged for a service-connected disability.
Served during any of the following:
World War II – September 16, 1940, to July 25, 1947
Korean Conflict – June 27, 1950, to January 31, 1955
Vietnam War – August 5, 1964, to May 7, 1975; Check with the Veterans Administration Office (www.va.gov) for additional minimum active-duty requirements.
Persian Gulf War - August 2, 1990, to Present; Check with the Veterans Administration Office (www.va.gov) for additional minimum active-duty requirements.
Afghanistan & Iraq – Check with the Veterans Administration Office (www.va.gov) for minimum active-duty requirements.
Served for a minimum of 181 days of continuous active duty with no dishonorable discharge or less than 181 days if discharged for a service-connected disability.
Served during any of the following:
July 26, 1947, to June 26, 1950
February 1, 1955, to August 4, 1964
May 8, 1975, to September 7, 1980 (Enlisted); or to October 16, 1981 (Officer)
Enlisted Veterans whose service began after September 7, 1980, and officers who service began after October 16, 1981, must have completed 24-months of continuous active duty and been honorably discharged. Check with the Veterans Administration Office (www.va.gov) for additional minimum active-duty requirements.
Active duty service members can qualify for a VA Loan if they meet the below criteria:
90 continuous days of active duty service
Reserves and National Guard
National Guard and Reserve members can qualify for a VA Loan if they served 90 days of active duty service between the following period:
Persian Gulf War – August 2, 1990, and the present
OR any time period if 6 creditable years are served and at least one of the following is true:
Were discharged honorably
Were placed on the retired list
Continue to serve in the Selected Reserve
Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable
In select situations, spouses of Service Members may quailfy for a VA Loan.
Surviving spouse of an eligible Veteran who died resulting from service and has not remarried.
The spouse of an Armed Forces member who served Active Duty and was listed as a POW or MIA for more than 90-days.
Certain U.S. Citizens who served in the Armed Forces of a government allied with the United States during World War II.
What type of home can I buy with a VA loan?
A VA home loan must be used to finance your primary residence located within the United States or one of its territories. The following types of homes can qualify for a VA Loan:
Existing Single-Family Home
Townhouse or Condominium (must be a VA-Approved Project)
New Construction Residence
Home Refinances and Certain Types of Home Improvements
How do I apply for a VA guaranteed loan?
You can apply for a VA Loan with any mortgage lender that participates in the program. In addition to the application requirements from your lender, you will need the following at application time:
Certificate of Eligibility from the Veterans Administration by submitting a completed VA Form 26-1880
If I have already obtained one VA Loan, can I get another one?
Yes. If you paid your prior VA Loan sold the property, you can have your eligibility for the VA Loan Program restored. Also, if you have paid off the home but still own it you may be able to have your eligibility restored one time.
To regain restoration of the VA Loan eligibility, you must send the Veterans Administration a completed VA Form 16-1880 to the VA Eligibility Center. A paid-in-full statement from the former lender or a copy of the HUD-1 settlement statement is satisfactory. To prevent delays in processing, it's advisable to include evidence that the prior loan has been paid off, and if applicable, the property was sold.
What are the benefits of a VA Loan?
100% Financing & No Down Payment Loans
No Private Mortgage (PMI)
No Penalties for Prepaying the Loan
Competitive Interest Rates
Qualification is Easier than a Conventional Loan
Sellers Pay Some of the Closing Costs
Can be combined with additional down payment assistance to reduce closing costs