What Is a VA Loan?

By Darin Windham
Realtor
Key Finders Group RE/Max Alliance

November reminds us of the beginnings of cold weather, football, hot drinks by the fire, and of course Thanksgiving and Black Friday. And it’s also the month we celebrate Veteran’s Day.

Veterans Day originated as “Armistice Day” on Nov. 11, 1919, the first anniversary of the end of World War I. Unlike Memorial Day, Veterans Day pays tribute to all American veterans — living or dead — but especially gives thanks to living veterans who served their country honorably during war or peacetime.

If you’re a veteran with steady employment, it’s a great time to enter the housing market. VA interest rates are low, and service members are taking advantage of the financing boom. Affordable home financing is a major military benefit. Here’s what you need to know to take advantage of it.

What Is a VA Loan?

The VA home loan program provides a way for service members, veterans, and surviving spouses to purchase, improve, or refinance a home with competitive mortgage rates. One of the biggest draws of a VA loan is that it allows you to secure a loan with 100% financing. Some of the other benefits include:

• No down payment required (as long as the sales price isn’t higher than the appraised value)
• No private mortgage insurance (PMI) required, even if the down payment is less than 20% of the mortgage amount
• Potentially better rates and terms
• Potentially fewer closing costs

To qualify for a VA loan, you need to be one of the following:

• Veteran
• Active-duty service member
• Current, former, or discharged member of the National Guard or the Reserves
• Surviving spouse of a veteran who either died in active duty or had a service related disability

There are additional service requirements you’ll need to meet and documents to supply. The most important document will be your Certificate of Eligibility (COE). This certificate shows a lender that you meet the service requirements to qualify for a VA home loan and shows you what benefits you’re eligible for. You can get this online from the VA, your lender, or by filling out a mailed request. And VA loans are not a one-time benefit. You can apply more than once – as long as you are purchasing a primary residence and pay off the VA loan each time.