The Department of Veterans Affairs Home Loan Basics


House with American flag hanging from front porch.

So you're buying a new home. Now THAT is super exciting. But before you begin picking out furniture, the first move toward homeownership is meeting with a lender to secure a loan. That's where the Department of Veterans Affairs home loans come in.

The Home Loan Program is a substantial benefit you have earned with your military service. Benefits that include no down payment, no private mortgage insurance, negotiable interest rates, etc. It's a fantastic deal. We'll show you what it's all about.

The quick rundown

Find

more information on home financing, your rights as a buyer and understanding what you can afford, at the Department of Housing and Urban Development Home Buying Page.

Essentially, a VA home loan guarantees the lender they will be covered even if you fail to repay your loan. You get much better financing terms and you're not required to make a down payment. It's a win-win.

Even if you haven't been approved for a traditional loan, you might still qualify for a VA loan. To find out, call the Regional Loan Center for your area.

Features of Veterans Affairs home loans

OK, we know you want to get to the fun part of a VA home loan — the benefits. Keep in mind, every loan could end up being a little different. Here are the standard features:

  • No down payment. Perhaps you can save or invest what would have put aside as your down payment.
  • 30-year loans. What's especially nice here is not only do you have a long time to pay back your loan, but you can pick your repayment method, too. So if you'd rather switch to a graduated repayment, that's a possibility.
  • Negotiable interest rates. You are still looking at the current rates in the market, but you will get the opportunity to write down a number and slide it across the table to your lender.
  • No mortgage insurance premium. Veterans are required to pay the VA's funding fee, but no mortgage insurance.
  • Right to prepay your loan. Rule of thumb — always try to pay off loans early. Not having to pay interest leaves you with additional money to invest in other things. Some loans will penalize you for doing that, but these won't.
  • Assumable mortgage. When you sell the property, you may elect to have a VA-eligible buyer assume your mortgage. If you do, the assumer's qualifications must be reviewed and approved by the lender or the VA.
  • Reduced funding fees. You can elect to finance the funding fee, and if your down payment is at least 5 percent, you are eligible for a reduced funding fee. If you are a veteran receiving compensation, you are exempt from the funding fee.
  • Warranty. You'll get a warranty from the builder, plus assistance from the VA getting the builder's cooperation on homes Veterans Affairs inspects during construction.
  • Leniency. If you are experiencing some temporary financial difficulty, ask Veterans Affairs how they can help.

With so many different mortgage lenders and loans it can be overwhelming. Help is available. The Veterans Affairs Home Loan Program has helped thousands of active-duty service members and veterans become homeowners. Now that you're armed with the basics of the Home Loan Program, you can start looking into how to use it to get your dream home.


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