Veteran Affairs Mortgage Loan Program U.S. Department of Veteran Affairs
Much like the Federal Housing Administration (FHA), the U.S. Department of Veteran Affairs or a Veteran-Affairs Mortgage Loan Program has been around for decades to help the service members of the United States (and their spouses) become homeowners.
The VA offers a variety of lucrative benefits to service members in terms of home financing including purchase mortgage options where, in some cases, borrowers do not have to put any money down.3
Like other government mortgage programs, the VA insures the mortgage in case of borrower default. Private lenders then can provide a VA mortgage program to borrowers with more favorable terms due to the reduced risk.
Applicants typically need to obtain a certificate of eligibility (COE) prior to applying.1 This can be done online through the VA benefits portal or via mail. Some preferred VA lenders like New Century Mortgage can even help you obtain a certificate of eligibility for your next purchase or refinance transaction.
Let’s take a look at a brief history of the U.S. Department of Veteran Affairs, along with the types of home mortgage loan programs it offers to eligible service members.
Veteran-Affairs Mortgage Loan Program: A Brief History
The history of the U.S. Department of Veteran Affairs stems back to the 1940’s during WWII when the U.S. passed the G.I. Bill, formally known as the Servicemen’s Readjustment Act, which was enacted to provide additional benefits to U.S. active duty service members and veterans. Part of the act allowed the VA to insure loans made by lenders to qualified military personnel.1
While some changes to the law occurred over the years to incorporate new and improved flexibilities, the Veterans Housing Benefits Improvement Act of 1978 and Veterans Home Loan Program Amendments in the early 1990s loosened restrictions on which military members could qualify for benefits. This allowed more veterans to qualify for VA insured mortgage loans.
The VA has several home loans programs available to eligible borrowers and continue to gain favor due to its competitive rates and repayment options
VA Mortgage Loan Program – Who is it for?
While FHA loans might appeal to a broader audience, the VA’s home loan programs are targeted for active duty, reserve, or retired service members of the armed forces and surviving spouses.
The VA also requires you obtain a certificate of eligibility prior to starting a loan application. Once you have a certificate of eligibility, you can then apply for a mortgage loan based on the program that best fits your particular needs.
In addition, New Century Mortgage can help you apply for your COE and assist you with your VA mortgage application. Above all, VA loan programs are options clients may be able to take advantage of:
Veteran-Affairs Mortgage Loan Program – Fixed Rate and Adjustable Rate Mortgages
Regardless of whether you are purchasing or refinancing, the VA offers both fixed rate and adjustable mortgage solutions to qualified borrowers.1 In fact, borrowers may even qualify for a down payment waiver on a new purchase, provided that the sales price does not exceed the appraised value of the home.3
Furthermore, borrowers can also obtain seller’s credits which can be used to reduce your closing costs. In other words, effectively lowering or eliminating your out of pocket expenses.
An added benefit is that mortgage insurance (MI) isn’t required like many FHA programs and certain conventional loans.3 Also, there are also no prepayment penalties and surviving spouses can be eligible for VA benefits and home loans as well.3
In addition, 1-4-unit dwellings, condos, manufactured homes, and newly constructed homes can qualify under this program.3
Interest Rate Reduction Refinance Loan (IRRRL) – Veteran-Affairs Mortgage Loan Program
An Interest Rate Reduction Refinance Loan is essentially the VA’s version of a streamlined refinance. Therefore, the refinance process is fairly simple in concept to that of an FHA Streamline.
The goal of this program is to lower your monthly mortgage payment by effectively lowering your interest rate or helping you switch to a more stable monthly payment by converting an existing VA insured loan from an adjustable rate to a fixed rate product4.
Keep in mind that a VA funding fee may apply, you can typically include these costs in the new loan amount meaning you won’t have to pay anything upfront4.
Have more questions about the VA’s mortgage loan programs? In conclusion, New Century Mortgage can answer all your VA related questions.