The Veterans Administration (VA) developed the VA Loan so that active duty military personnel and veterans would be able to purchase or refinance homes that they may otherwise be unable to finance.

Purchasing a Home

The VA offers 100% financing at low fixed and adjustable rates. The loan requires no money down. Instead on focusing on credit scores, the VA underwriters are interested in the Veteran’s ability to repay the loan. The VA charges a “funding fee” to off-set the need for mortgage insurance. This funding fee (2.15%) is added on to the loan amount and is financed. There is no monthly mortgage insurance. The VA will also waive the funding fee for disabled Veterans.

Other benefits of a VA loan include: 

• Negotiable interest rates
• Closing costs are comparable, and sometimes lower, than other financing types
• No private mortgage insurance is required
• No pre-payment penalties
• A mortgage can be taken over (or “assumed”) by the buyer when a home is sold
• Counseling and assistance is available to veteran borrowers having financial difficulty or facing default on their loan