Nationwide Mortgage

Purchasing a Home with a VA Loan

If you have served in the Army, Navy, Air Force, Marine Corps, Coast Guard, National Guard or Reserves after September 15, 1940, you may be eligible for a VA home loan as part of your benefits. In order to qualify, you must first get a VA Certificate of Eligibility (COE) from the Department of Veterans Affairs.  

What is a VA Loan?

The VA home loan is part of the original Servicemens Readjustment Act (also known as the GI Bill of Rights) that was passed by the United States Congress in 1944.  The law has been amended a few times since then, but it includes a VA loan guarantee program to help Veterans obtain mortgage loans through various VA approved lending institutions.  Despite a great deal of confusion and misunderstanding, the Veterans Administration does not provide direct financing to Veterans under this law.

Since the VA guarantees this home loan program they insure up to 25% of the loan if the Veteran defaults on the mortgage, which offers protection for the lending institutions. This protection safeguards the lenders and allows them to offer low-risk financing without a customary down payment that other loan programs such as FHA and conventional loans require.  VA loans are also exempt from paying the Mortgage Insurance Premiums (MIP) required by FHA loans, and the Private Mortgage Insurance (PMI) required by conventional loans with less than 20% down payment. The Veterans Administration does, however, charge a VA Funding Fee.

**All Disabled Veterans receiving 10% or more VA disability are Exempt from paying the VA Funding Fee.**

What are the benefits to buying a home with a VA loan?

As of November 1, 2012, the Department of Veterans Affairs has guaranteed over $20 million in home loans since the GI Bill of Rights was passed in 1944. This is an astonishing number that will continue to rise, since the VA home loan program is one of the few remaining mortgages available that does not require a down payment. Listed below are the advantages of a VA mortgage loan.

  • 100% financing / $0 down payment
  • No Private Mortgage Insurance required
  • Lower interest rates
  • Regulated closing costs (You will not pay more than fair market costs)
  • No pre-payment penalty
  • The loan is assumable to eligible borrowers
  • First-time homebuyers are eligible

VA Loans vs. FHA Loans

The VA loan program is similar to the FHA loan program, but there are a few distinct differences:

VA Loan
FHA Loan
  • No Down Payment
  • 3.5% Down Payment
  • No Mortgage Insurance
  • Requires Mortgage Insurance
  • Guaranteed by the Veteran's Administration
  • Guaranteed By the Federal Housing Administration

VA Loans vs. Conventional Loans

A conventional mortgage loan is the traditional mortgage offered by most lenders. The VA loan may be a better choice when purchasing a home due to its advantages over conventional financing:

VA Loan
Conventional Loan
  • No Down Payment
  • Requires Down Payment - Often at 10%
  • No Mortgage Insurance
  • Requires Private Mortgage Insurance
  • Assumable
  • Non-Assumable