The VA Loan Program

The VA Loan Program | by Jim Catalano

The VA Loan Guaranty Program is a special mortgage loan benefit designed for qualified U.S. military veterans and their spouses.

The VA mortgage loan is a no down payment, 100 percent mortgage that is available through any VA-approved lender.

The interest rates available on a VA mortgage tend to be below-market which is one of the primary benefits of the program.

Another advantage of a VA loan is that there is no mortgage insurance for loans with less than 20 percent down.

Brief History of the VA Loan Guaranty Program

Congress conceived the VA Home Loan Guaranty Program in 1944 as a response the harsh aftermath associated with wars. The overall objectives were to diminish the greatest possible extent the economic and sociological problems of post-war readjustments of millions of men and women who had served in the Armed Forces.

The VA loan program was intended to be a cash bonus and meet the needs of the U.S. veterans who likely were unable to establish credit while serving in the Armed Forces.

The program was a success and continues to be a success today.

Since it’s inception in 1944, there have been more than 20 million VA loans with nearly 300,000 VA loans per year.

The VA guaranteed more than 629,000 home loans for U.S. military veterans in 2013 and now guarantees over 1.7 million loans nationwide.

VA Loan Requirements

The minimum eligibility requirements to meet include verification of income and assets and minimum service times.

Minimum service times vary depending on whether you served during peacetime or wartime.

For example, for veterans who served the U.S. military during World War II, the Korean War, or the Vietnam War, VA loan benefits are available after 90 days on active duty, or with a discharge under any condition other than dishonorable.

For veterans who served during peacetime between 1947-1981, they are required to show at least 181 days of continuous duty and discharge under any condition other than dishonorable.

For individuals with service-connected disabilities, minimum 90- and 181-day standards are waived in full.

VA loan benefits are also extended to certain members of the National Guard and Reserves; National Oceanic & Atmospheric Administration (NOAA) officers; public health service officers; and Air Force, Coast Guard, and military cadets.

Surviving spouses who remarry after age 57 may be eligible for VA benefits, too.

Benefits of the VA Loan

There are many advantages to a VA loan. The most popular is the zero-down-payment. However, there are plenty of other benefits worth mentioning here.

An excellent benefit is that VA home loans are assumable. This means your mortgage can be transferred to a future home buyer as long as that borrower is also VA-eligible. This is especially attractive in a market where interest rates are rising. In other words, a person can buy your house and your interest rate. A definite competitive advantage when interest rates are rising.

A major advantage of securing a VA loan is the Veterans Administration waives mortgage insurance requirements on every loan it guarantees. No matter what your down payment, whether it’s zero or any amount of cash, you will never be required to pay mortgage insurance when you use your VA benefits for a home mortgage.

VA loans are also considered simpler to qualify for than other conventional loan types. The VA mortgage guidelines list no minimum credit score, no maximum VA loan size, and provide debt-to-income requirements that are often less stringent than comparable loan products through Fannie Mae and Freddie Mac.

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