What are the Steps in Obtaining a VA Loan?

Here are some insights into obtaining a VA loan.

If you have served in the Armed Forces in the United States then you may be eligible for the VA Home Loan Program that is administered by the Department of Veteran Affairs.

In order to apply you generally (though not always) have to fill in a request form on their website for a certificate of eligibility.

Veteran Home Loans Eligibility Requirements

• Having served for a minimum of 90 days on active duty during World War 2, Korea or Vietnam
• Or at least 181 days of continuous active duty during peacetime prior to 9/7/1980
• Or at least 24 months of active duty after that time

If you don't pay back the loan, the government will. So it removes all the risk of the transaction from the financial institution, and means that the interest rates you will have to pay for any loan will be lower. The reason for this is that anyone who is eligible and who is going about obtaining a VA loan is automatically a better candidate for the banks because they represent a "cannot lose" loan.

So all of the banks are literally tripping over themselves trying to outdo each other in offering preferential interest rates on their home loans to make sure that they attract as many of these top-caliber clients as possible.

Additionally, it means that you can secure up 103.15% financing, which is almost unheard of for normal loans without substantial guarantees.

Disadvantages of Veteran Home Loans

The only disadvantages to a VA mortgage are that first, whilst there isn't a limit as such on the cost of the home you choose to buy, that there is a maximum amount that the Government will cover under the VA Home Loan Scheme which as-of Jan 2011 was $417,000.

Second, you do have to pay a funding fee of up to 3.15% to the Department of Veteran Affairs, so there are some administrative charges to take into account.

On balance though the VA Home Loan Program offers a great opportunity to get financing for your home at a very favorable interest rate, so if you are eligible, it is well worth looking into obtaining a VA loan.

Would you like to see the certificate of eligibility form? Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits (be sure to type in 26-1880 to see a copy of the form).

If you have any other questions concerning obtaining a VA loan, do not hesitate to ask your question here.

Don't forget, first time home buyers looking to procure a VA home loan program, need to make sure to have good credit.

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