VA Home Loan

WHAT IS A VA GUARANTEED LOAN?

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home which must be for their own personal occupancy. To get a loan, a veteran must apply to a lender. If the loan is approved, VA will guarantee a portion of it to the lender. This guaranty protects the lender against loss up to the amount guaranteed and allows a veteran to obtain favorable financing terms.

There is no maximum VA loan but lenders will generally limit VA loans to $240,000. This is because lenders sell VA loans in the secondary market, which currently places a $240,000 limit on the loans. For loans up to this amount, it is usually possible for qualified veterans to obtain no down payment financing. A veteran's basic entitlement is $36,000 (or up to $60,000 for certain loans over $144,000). Lenders will generally loan up to 4 times a veteran's available entitlement without a down payment, provided the veteran is income and credit qualified and the property appraises for the asking price.

VA LOANS OFFER THE FOLLOWING IMPORTANT FEATURES:

• Equal opportunity for all qualified veterans to obtain a VA loan.
• No down payment (unless required by the lender or the purchase price is more than the reasonable value of the property).
• Buyer informed of reasonable value. Negotiable interest rate.
• Ability to finance the VA funding fee (plus reduced funding fees with a down payment of at least 5% and exemption for veterans receiving VA compensation).
• Closing costs are comparable with other financing types (and may be lower).
• No mortgage insurance premiums.
• An assumable mortgage.
• Right to prepay without penalty.
  For homes inspected by VA during construction, a warranty from builder and assistance from VA to obtain cooperation of builder.
• VA assistance to veteran borrowers in default due to temporary financial difficulty.