VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
- Competitive interest rate.
- Zero down payment required up to County VA Loan Limits when full entitlement is available
- Closing costs comparable – and sometimes lower – than other financing types.
- No private mortgage insurance requirement.
- Right to prepay loan without penalties
- Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.
- Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
- New VA Jumbo Loans allow higher 100% financing for VA Loans
- You can exceed the county VA loan limits by contributing a down payment (usually smaller than what is required on conventional or FHA Loans)
Check out the California County VA Loan Limits
Although mortgage insurance is not required, the VA does charge a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount (most common).
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/ caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.
A Certificate of Eligibility from the VA must be obtained to qualify for a VA loan. If you do not have your COE, we can help.