What are the Benefits of a VA Home Loan?

Q: My husband and I are getting ready to buy our first home. I am a U.S. military veteran, and want to use my veteran’s benefits to finance our home purchase. My husband wanted me to explain the benefits of a VA home loan first. Can you help?

A: According to the Department of Veterans Affairs (VA), benefits of using its Home Loan Guaranty program include:

  • VA home loans and refinance mortgages do not require a down payment unless the appraised value of the home being purchased is less than the selling price.
  • There are no mortgage insurance premiums associated with VA loans. The U.S. government backs the loans by guaranteeing lenders reimbursement of losses associated with foreclosure and default of VA home loans; this guaranty is what allows mortgage companies to lend with no down payment.
  • Sellers are permitted to pay buyers’ closing costs up to four percent of the sales price (or appraised value, whichever is lower). It’s important to note that while the VA allows this, sellers are under no obligation to pay any of the buyer’s closing costs.
  • Borrowers using VA mortgages cannot be assessed a pre-payment penalty for paying off their home loans or refinance mortgages early.
  • Your eligibility for VA home financing can be re-used.
  • VA mortgages are assumable. This can help you when it’s time to sell your home

The VA programs let you buy, build, remodel or refinance a home. VA’s Interest Rate Reduction Refinance (IRRR) program lets you refinance with less paperwork and at a lower cost. Please contact VA approved lenders for more information, or visit the VA’s Home Loan Guaranty website to learn more about eligibility requirements.

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