VA Home Loan Programs
VA Home Loan Programs
Knowing what it takes to get a home
The VA Home Guaranty Program came to be directly after World War II under the Servicemen’s Readjustment Act of 1944. The objective of the program was to help eradicate the economical and psychological problems associated with the post-war readjustment of millions of brave men and women.
Originally, returning soldiers could receive federally insured home, farm and business loans, due to the shortage of civilian goods from years of producing war goods; however, with the enacting of the Veterans’ Housing Act in 1974, business loans and farm loans were repealed and only single-family, homes that were intended to be the service member’s primary residence could be used.
Today, the program has evolved into a lifeline for military homebuyers, leading to a 168 percent surge in the number of VA Loans guaranteed from 2007 to 2011. This increase can be directly attributed to the key benefits offered by the program.
Uses and Benefits of the Program
Qualified borrowers can use their VA Loan to purchase, refinance and construct a home that meets the requirements set by the Department of Veterans Affairs (VA). The VA’s guidelines state that approved uses include:
- Purchasing a single-family home
- Refinancing an existing VA Loan to a new VA Loan, known as a Streamline Refinance or IRRRL
- Refinance a conventional loan to a VA Loan, known as a cash-out refinance
- Purchasing a single-family residential unit in a VA-approved condo
However, there are a few stipulations that prevent potential borrowers from using their VA Loan entitlement for the purchase of land, investment property or a home that is not intended to be the borrower’s primary residence.
Minor stipulations aside, VA Loans come with a bevy of benefits, including the most notable – zero money down. While many say that zero-down lending is dangerous, our nation’s veterans continue to prove skeptics wrong by repeatedly having the lowest foreclosure rates in the industry.
Other benefits of the program include:
- High loan limits, starting at $417,000 and extending over a million in certain high-cost counties
- Less stringent credit and income requirements
- No pre-payment penalties
- No private mortgage insurance
Eligibility and Qualifying
More good news for service members and veterans, almost every member meets eligibility requirements. These requirements state that a service member or veterans must have done one of the following: served 181 consecutive days on active duty during peacetime, 90 consecutive days on active duty during wartime, served six or more years in the National Guard or Reserves or be the surviving spouse of a fallen soldier. Those dishonorably discharged are not eligible.
Interested individuals who fall into one of the aforementioned categories should fill out a Certificate of Eligibility (COE), which proves service dates, and contact a VA approved lender. Lenders like Veterans United Home Loans are able to obtain your COE, which is helpful when becoming preapproved.
The Department of Veterans Affairs doesn’t give explicit income or credit standards to qualify for the program, since the VA doesn’t issue the loan. Income and credit standards are given by VA-approved lenders, which generally require a minimum score of 620 to qualify.
Chris Birk is the Director of Content and Communications for Veterans United Home Loans, the featured writer for VA Loans Insider and author of The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits. Connect with Chris on Facebook at VA Loans Insider or on Google+.