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When looking for a way to fund the dream of home ownership, many men and women who served or are serving in the United States military look into VA loans.
The Department of Veterans Affairs — formerly the Veterans Administration — loan program is for service members, veterans and eligible surviving spouses to help them become homeowners.
“We’re looking for the VA home loan to be the program of choice for veterans,” said Terry Rouch, assistant director for loan policy and valuation with the Department of Veterans Affairs. “This is what we consider one of the major benefits for their military service.”
While many of the terms are favorable, in some cases, a VA loan might not always be the best option for those who are eligible, so it is important to understand how a VA loan compares to a conventional loan and how and when they can be used.
What Is a VA Loan?
A VA loan is a mortgage loan for qualifying military personnel, veterans and surviving spouses administered through the Department of Veteran Affairs. The loans are made through private lenders but backed by the federal government. Among the benefits are lower interest rates and often no down payment .
The main benefits of a VA loan are:
- No down payment in many cases.
- Often lower interest rates than conventional mortgages.
- Limited closing costs.
- No need for PMI (private mortgage insurance).
- No penalty for prepayments or paying off the loan early.
“In the past year, we guaranteed more loans than we’ve ever done in the entire history of the program,” Rouch said. “We had 1.44 million loans in the fiscal year of 2021.”
Rouch said the fact PMI is never required with a VA loan is a huge benefit. Conventional lenders often require PMI if the buyer is making less than a 20% down payment.
Michael Anderson, a mortgage loan officer with Charter West Bank in the Omaha, Nebraska, area, said using the VA home loan program increases buying power.
“Say you wanted to keep your…
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