A VA loan is a mortgage loan guaranteed by the U.S department of Veterans Affairs (VA). VA Home Loans are available through the VA for up to 100% of the purchase price. You can obtain financing up to $417k with no money down.
The VA loan was designed to offer long-term financing to eligible American Veterans or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment.
The VA loan allows veterans 100 per cent financing without private mortgage insurance. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA; this fee is financed into the loan. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less.
Since there is no monthly mortgage insurance, more of the mortgage payment goes directly towards qualifying for the loan amount, allowing for larger loans with the same payment. In a refinance, veterans may borrow up to 90% of reasonable value, where allowed by state laws.
VA loans allow veterans to qualify for loans amounts larger than traditional Fannie Mae / conforming loans. VA will insure a mortgage where the monthly payment of the loan is up to 50% debt ratios.
The maximum VA loan guarantee varies by county. As of 1 January 2010, the maximum VA loan amount with no down payment is $417,000, VA also allows the seller to pay all of the veteran’s closing costs as long as the costs do not exceed 4% of the sales price of the home.
Keep your money: The VA offers 100% financing and ability to work your closing cost into the loan thus allowing eligible Veterans to walk into a home for zero out of pocket.
Get more for your money: VA Loans DO NOT require mortgage insurance and offer competitive Low Rates thus minimizing your monthly payment and enabling you to purchase at higher price point.
Right to prepay without penalty: With a VA Loan you will never have to pay a pre payment penalty giving you the freedom to sell your home our refinance at anytime.
VA assistance: Veteran borrowers in default due to temporary financial difficulty may be able to work with the VA to avoid foreclosure.
“Make Sense” Underwriting: VA Loans offer “make sense” underwriting allowing eligible VA borrowers with less than perfect or no credit at all to obtain home financing.