What is a VA loan?

A VA loan is a special type of insurance that is available to veterans of the US Armed Services to allow them to purchase homes after active service. The Veterans Administration will guarantee that the creditor will receive a portion of the amount of money lend if you default on the loan. This guaranteed amount of money is called the entitlement.

To be available for a VA loan you must meet a few eligibility requirements. You must not have been dishonorably discharged and have severed at least 90 days in World War II, the Korean Conflict, Vietnam, the Persian Gulf War, Afghanistan or Iraq. Check the VA’s web site to find out the range of dates for each of the conflicts. You also will qualify if you have 181 days of continuous peacetime service, if your were discharged due to a service related disability or if you have completed 6 years service in the Nation Guard or Reserves.

Once you have verified your eligibility and received your certificate of eligibility from the VA, you can begin shopping for your home. Your certificate of eligibility does not guarantee you will get a mortgage but it will make it easier to get one. There are a few restrictions as to the home that you can purchase. It must be in the US, be an existing single family home, townhouse in an approved project, a newly constructed home, a manufacted home with a lot or refinancing your existing home.

A VA loan can be a very good solution for many different situations. For example, no down payment loans are fairly common thus making it easier for veterans to afford homes. With a VA loan you do not need private mortgage insurance and there are no penalties if you prepay your loan. You may find it easier to a mortgage and at very competitive rates.

As you can see, a VA loan can be an excellent way for you to secure either a new home or refinance your existing home. After you have proven you eligibility you should have no problem finding a mortgage.