The U.S. Department of Veterans Affairs (VA) offers eligible military veterans, servicemembers and surviving spouses of servicemembers and veterans the chance to buy or refinance homes without the requiring a down payment or mortgage insurance. The VA Home Loan Guaranty benefit can also be used more than once by qualified borrowers.
VA Loans Require No Down Payment (Most of the Time)
VA loans do not require borrowers to make a down payment. This helps military families transition into owning homes without a high cash outlay. In cases where the selling price of a home exceeds its appraised value, VA borrowers are required to pay the difference between the home’s selling price and its appraised value.
VA Loans Require No Mortgage Insurance
Mortgage lenders typically require either private mortgage insurance or FHA mortgage insurance on home loans with down payments of less than 20 percent of the home’s appraised value. The VA requires a one-time payment of a loan funding fee at closing. The VA determines the funding fee according to specific borrower circumstances:
- VA loan borrower is a first-time borrower or repeat borrower: The funding fee is higher for repeat borrowers who do not make a down payment.
- Type of military service: National Guard and Reservist pay a higher funding fee.
- Eligibility for waiver of funding fee: The VA waives the funding fee for veterans receiving compensation for service-related disabilities and for veterans eligible to receive compensation for service-related disabilities and who do not receive retirement or active duty pay. The funding fee is also waived for surviving spouses of servicemembers who died while in service or as the result of a service-related disability.
Consult the Loan Fee Structure for VA Guaranteed Loans for funding fee rates applicable to your situation.
Eligible Borrowers May Re-use VA Home Loan Guaranty Benefits
Eligible borrowers can re-use VA loan benefits to buy another home or for refinancing an existing home loan. The VA relies on its network of VA approved mortgage lenders to finance your home purchase or refinance. Contact VA approved mortgage lenders for mortgage quotes and to learn more about applying for VA loan eligibility and finding a loan that’s right for you.