VA Loans are basically home loans made by approved lenders to qualifying veterans, guaranteed by the Veterans Administration (VA).
The VA Guaranty protects lenders from losses in the event of default or foreclosure. Due to this significant incentive from VA to the lenders, veterans can purchase a home for no money down in most cases.
The differences between conventional loans and VA loans
VA loan qualifications are slightly different from conventional loan requirements. Conventional loans have no government guaranty or insurance. They can sometimes be more flexible if the loan amount exceeds VA mortgage limits. Conventional loan guidelines also usually require something a much higher down payment amount. Most of the VA purchase loans do not require a down payment and often don’t even require cash at settlement. These flexible eligibility requirements make qualification for a VA loan much more flexible and easy.
Legitimate VA loan uses
While the lenders can vary in what they do, the VA loans are good for the following:
- Buying any residential property such as single-family or multi-family home, condominium, or townhouse.
- Building a brand new residential property on a parcel of land.
- Purchasing and then renovating a property in need of repair.
- Installation of energy-efficient improvements to a home.
- Refinancing an already existing VA guaranteed loan to get a better interest rate.
- Buying a pre-fabricated or manufactured home.
- Buying a mobile home
- Buying a home and assuming the existing mortgage.
A qualified VA lender can help an eligible veteran with just about every type of loan. If they can’t help (for example some lenders do not loan on mobile homes), you can find another lender from the department’s website.
Things not to do during VA Loan processing:
- Don’t buy anything on credit—except for the minimum use of your credit cards necessary to maintain your household, do not use them. Also no big purchases of boats, cars or other assets.
- Don’t buy another house.
- Don’t blow cash on anything except paying off debt—you may need to show its presence in the account. Worse still, if for some reason the VA loan cannot work, you may need these assets to apply for a conventional loan.
- Don’t get wrapped up in a lawsuit, either as plaintiff or defendant.
- Don’t move to a new place.
- Don’t stop paying your rent and other bills.
Unique features of VA guaranteed home loans:
- You can assign your mortgage to qualified borrowers.
- You can receive a loan for a manufactured, including a mobile home.
- You can buy and remodel a home before you take occupancy.
- You can build a home from scratch.
- You can reuse your eligibility.
Still have questions about VA loans or whether you can qualify for a VA loan from a great VA lender? Be sure to contact one of our VA home loan experts today.