If you are eligible for it, a VA mortgage can be a great way to finance a home.
The program comes under the Department of Veterans Affairs. Its purpose is to allow eligible veterans to finance a home at favorable terms. Effectively, with a VA loan an eligible veteran can buy a property for less money than through another financing option.
You obtain a VA loan from a private lender, and the Department of Veterans Affairs guarantees a portion of the loan, allowing the lender to offer favorable terms.
You’ll still go through the process of qualifying for a VA mortgage, as you would with any other type of mortgage. In order to qualify, you must have a Certificate of Eligibility, plus good credit and sufficient assets; occupancy rules are complicated, but basically you must personally live in the home as your primary residence.
There is no down payment unless the lender requires it or the price is higher than the home’s value. Other advantages include:
- The benefit can be reused.
- A VA loan can also be used to make improvements to your home at the time of purchase.
- You can refinance in order to get a lower interest rate.
- There are no mortgage insurance premiums, but there is a funding fee, which is a percentage of the purchase price. You may be able to roll it into the mortgage.
- The loan is assumable. This means that a qualified potential buyer can take over your loan payments.