Understand Your VA Home Loan

ByTop10.com StaffSep. 16, 2020

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Helping military families buy homes
If you are an armed forces veteran and are planning to apply for a mortgage on a new home or refinance an existing loan, you might be eligible to secure favorable terms from your lender.

The letters “VA” in VA Home Loan advertise that this benefit is provided by the Department for Veterans Affairs. The VA Home Loan helps service members, veterans, and surviving spouses secure loans to help recipients’ with homes for their own occupancy.

The VA guarantees part of the loan, helping the borrower obtain a loan from a private lender, bank, or mortgage company at favorable terms without making a down payment. The VA will guarantee up to 25% of a home loan, up to a maximum amount of $113,275, making the maximum loan amount $453,100.

Over 22 million VA loans have been approved since the program’s creation as part of the GI Bill in 1944.

What Are the Benefits?

  • All qualified veterans are guaranteed equal opportunity to obtain a loan
  • The loan is reusable
  • No down payment, except if required by the lender or if the purchase price is more than the reasonable property value
  • No mortgage insurance required
  • The one-time VA funding fee can be included in the loan
  • Veterans receiving VA disability compensation are exempt from the funding fee
  • The VA places a limit on the closing costs the veteran can pay
  • Veterans can turn to VA staff for assistance if they become delinquent on their loan


Top VA Mortgage Lenders:

Lender Credit Score Get an Offer
Veterans United
620+
Quicken Loans
620+
AmeriSave
580+

How Do You Apply?

To approve your VA Home Loan, lenders need a Certificate of Eligibility (COE).A COE confirms that an applicant served the required time and attests to honorable character of service. There are three ways to apply for a COE: through a VA-approved leading mortgage lender; through the VA’s eBenefits website; or through the mail, with VA Form 26-1880.

There is a two-part appraisal process comprised of a valuation and an assessment of property conditions called the Minimum Property Requirements (MPRs). The appraisal process may be requested by any party to the transaction – provided the appraiser is assigned by the VA.

VA loans typically close within 30-45 days.

Who Can Apply for a VA Loan?

The following people meet the requirements for the VA loan program: 

  • Veterans who have met the minimum service period
  • Active service members who have served a minimum period
  • Reservists and members of the National Guard who meet requirements
  • Some surviving spouses of deceased veterans.

The minimum service period is usually 90 consecutive days of active service in wartime, 181 days of active service in peacetime, more than six years of service in the National Guard or reserves, or the spouse of a service member who has died in the line of duty or as a result of a service-related disability.

People meeting any of these descriptions can go to eBenefits or call 1-877-827-3702 to determine their eligibility.

What Are the Risks?

  • Rejection: Some veterans and service members have reported being rejected by sellers who preferred to accept a lower offer from a non-VA bidder. This may be due to a misperception that a lack of a down payment means the buyer is not qualified and is less likely to be able to close a transaction.
  • Under appraisals: If the appraisal value is below the targeted loan amount, a buyer can ask the seller to lower the purchase price and pay the remainder in cash, or request a new appraisal. In some circumstances, the buyer may find they have little choice but to withdraw their purchase offer.
  • Wait time: Appraisals can take around 10 days, but this varies by area and some people can be left waiting for much longer.
  • Repairs: Although the MPR process is designed to ensure a home is safe, sanitary, and structurally sound, it does not protect the buyer against the risk of having to make repairs right after closure.

What Are the VA Loan Rates?

The average interest rate of a 30-year fixed-rate VA home loan was 4.05% in December 2017, according to Ellie Mae, the software company that processes almost one-quarter of American mortgage applications. In comparison, the average cost of a conventional mortgage was 4.32%.

The VA does require payment of a one-off funding fee for all VA-approved loans. Most borrowers pay a fee of 2.15% of the amount of the loan, although members of the National Guard or reserves pay 2.4%. The VA will reduce the fee to 1.5% (or 1.75% for National Guard or reserves) for those who pay a 5% down payment on the home, and to 1.25% (or 1.5% for National Guard or reserves) for a 10% down payment. Surviving spouses and disabled service members are exempt from the funding fee.

How Do You Find the Right Lender?

Factors to consider:

  • Customer service
  • Online user experience and tools
  • Efficiency
  • Experience with VA loans
  • Origination, closing and inspection fees
  • Your credit score

Most of the top lenders that offer conventional mortgages will also offer VA home loans and many of the considerations you should think about apply to other types of mortgage loans as well. As with any loan, VA loan rates vary between lenders, so it is worth shopping around at the best VA home loan lenders and their rates and terms.


A Closer Look at the Best VA Mortgage Lenders of Today:

1. Veterans United Home Loans

Veterans United

Best for: Getting a VA loan from an expert VA lender

Veterans United Home Loans isn’t just dedicated to veterans in name—it’s dedicated to veterans in its actions. Veterans United is one of the largest VA lenders in the country, having issued $10.5 billion worth of VA loans in 2018. Its agents are exclusively focused on VA loans. More than 1,400 lenders issue VA loans, but Veterans United is among the biggest and most well-known.

Veterans United Home Loans Veterans United Home Loans View Rates

2. Quicken Loans 

Quicken Loans

Best for: Online or over-the-phone customer service

Quicken Loans is another option for getting a VA loan. It offers a range of loan types including government-backed loans like FHA, HARP, VA, and USDA loans. You'll find the information you need online for your VA loan, but if you're more comfortable with one-on-one human interaction, Quicken Loans has experts waiting for your phone call. Fill in a short form, and they'll contact you with the information you need. There are also Jumbo VA loans available, a unique offer, as well as refinance and cash-out home loans. Quicken Loans has an "Excellent" rating from Trustpilot and calculators to assist you in finding the rates and terms that are suitable for your VA home loan. Learn about the approval process at the Quicken Loans website.

Quicken Loans Quicken Loans View Rates

3.  AmeriSave Mortgage

Best for: Those who are looking for a straighforward process

Based in Atlanta, Georgia, AmeriSave Mortgage Corporation has established itself as one of the premier names in the mortgage loans and refinancing industry. The company was established in 2002, and has since expanded its service to 49 states and the District of Columbia. Today, the company offers a quick and straightforward way for potential homeowners and prospective buyers to uncover the loans they need and access funds efficiently. AmeriSave has expanded to employ more than 500 mortgage specialists, and funds billions in home loans every year. Moreover, the company offers a wide variety of mortgage options, including conventional, jumbo, FHA, VA and USDA loans.

AmeriSave Mortgage AmeriSave Mortgage View Rates