VA

Government – VA

The VA loan began in 1944 through the original Serviceman’s Readjustment Act, also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin. D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. VA guaranteed loans are made by private lenders, such as banks, savings and loans, or mortgage companies to eligible veterans for the purchase of a home, which must be their own personal occupancy. The guaranty means the lender is protected against loss if you or later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

The VA provides a 100% guarantee to lenders providing financing to qualified veterans. The veteran must receive a Certificate of Eligibility from the VA to be considered for program underwriting. The request for the “C of E” can be initiated by the lender and is often the first step in the loan process. VA benefits are usually conferred on vets that have served at least 2 years active duty or 6 years active Reserves (see your lender for specific duty dates). The benefits of VA financing are a 0% down payment requirement and no monthly mortgage insurance. In lieu of monthly mortgage insurance the veteran pays a financed 2.2% Guaranty Fee (3.3% for subsequent use) to VA. This Guarantee Fee is waived if the veteran has sustained a service related disability. VA prescribes closing costs that can be charged to the vet and are typically lower than closing costs associated with other programs. VA loan programs consist of a 30 or 15 year term at a fixed interest rate.