VA Mortgage Loans: Do You Qualify?
The Veterans Administration mortgage loan program was created in 1944 as part of what became known as the GI Bill of Rights. The goal of the program was to help returning war veterans become home owners.
By requiring no down payment, this paved the way to success for the program. After returning home from the war, veterans could practically buy homes in an instant without having to wait and save up for a down payment. While some of the specifics of the program have changed over the years, VA loans are still insured by the government against default, and still offer no down payment or private mortgage insurance.
Here are some other benefits of VA loans:
- No prepayment penalties;
- Insured against default by the United States government;
- Lower closing costs.
VA loans are not actually provided by the federal government; rather, the government insures loans provided by private lenders. VA-insured loans are open to active military personnel, veterans, reservists, members of the National Guard, and unmarried spouses of a qualifying member of the armed forces who died as a result of serving in the military, who meet the following qualifications:
- Veterans must have served a minimum of 90 days during wartime in World War II, the Korean Conflict, or the Vietnam War. Peacetime service requires at least 181 continuous days of military service.
- Enlisted veterans who began their service after September 7, 1980, or officers who began their service after October 16, 1981, must have served at least two years.
- National Guard or Reservists need to have served a minimum of six years.
- No one who has been dishonorably discharged is eligible.
- *There are additional criteria for military personnel who have served in Afghanistan and Iraq.
Before you start shopping for a VA loan, you'll need a DD214 form, which certifies your veteran status. You will also need all the other information you'd need when applying for a loan, including your Social Security number, gross monthly salary, bank account information, and other pertinent details.
The maximum guarantee authorized by the VA is 25 percent of the loan amount up to $104,250. The maximum VA home loan is $417,000. The maximum guarantee in Hawaii and Alaska is 25 percent of the loan amount up to $156,375. The maximum VA home loan in these states is $625,500.
While there are closing costs, some fees are negated for veterans, including settlement fees, document-preparation fees, attorney's services for non-title work, and escrow fees, among others.