What Is a VA Loan?

The U.S. economy was booming as World War II was coming to an end. One of the longest periods of growth, one that would see the development of a vibrant middle-class, was just beginning. In an effort to both thank and reward the men, women, and surviving spouses who sacrificed everything to defeat fascism, Congress passed the GI Bill and created the VA Home Loan Program. Now, returning vets would be able to attend college and realize the “American Dream” of homeownership.

VA Loan: A Lifetime Benefit

The VA Home Loan not only streamlined the mortgage application process, its generous credit terms and financial requirements made qualifying for a low interest loan with virtually no money down fast and easy. And, because this new loan program was guaranteed by the federal government, banks and direct lenders were quick to make it available to all qualified borrowers. The VA Loan Program was further modified over time, giving active service personnel, Veterans, and surviving spouses a lifetime benefit to purchase a home or refinance an existing mortgage.

Features and Advantages of a VA Loan

VA loan benefits make it faster and easier to get a mortgage or refinance.

• No maximum loan amount
• No down payment
• No mortgage insurance required
• No origination fees (only with an IRRRL)
• The “One Time Funding Fee” may be rolled into the loan
• Borrowers don’t pay commissions, brokerage or buyer broker fees
• Borrowers refinancing using the VA Interest Rate Reduction Refinancing Loan or IRRRL pay no appraisal or income verification fees
• Active service personnel can refinance a home even if it’s not their primary residence (charge up to one point)
• The seller may assist the borrower by paying some or all closing costs
• Appraisal, credit report, and closing costs including state and local taxes, and recording fees may be paid by the borrower, the seller or shared by both

A Veteran, surviving spouse, or those currently serving in the armed forces who may be eligible for a VA Home Loan must provide a Certificate of Eligibility or COE.

The Bottom Line

What is a VA loan? Consider this: in 2017 alone, 740,339 VA mortgage loans were guaranteed with an average loan amount of $254,870 for a total of $188,690,063,604. The VA Loan is more than just a way to say thanks. It provides affordable housing for the many who have made the ultimate sacrifice in serving our country, protecting our freedom, and helping to a prevent global conflict for more than 70 years. The VA Loan is something we can all be proud of.