Everything You Need to Know About VA Loans

July 20, 2023 | Buying a Home | By: The Goodhart Group

If you’re a veteran, you need to know about the VA loan. This loan offers veterans a unique purchasing opportunity not available to non-veterans. In this blog post, we’ll dive deep into VA loans, answering your most frequently asked questions and helping you use them effectively.

What is a VA Loan?

A VA loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs (VA). It was designed to offer long-term financing to eligible American veterans or their surviving spouses, providing them with an affordable home buying option.

Who Qualifies for a VA Loan?

The VA loan program is for American veterans, service members, and select surviving spouses. To qualify, you typically need a good credit score, sufficient income, a valid Certificate of Eligibility (COE), and meet specific service requirements.

Service requirements vary based on the period in which you served and the branch of the military. As a general rule, if you’ve served 90 consecutive days during wartime, 181 during peacetime, or six years in the Reserves or National Guard, you may qualify.


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What Are the Advantages of a VA Loan?

One of the primary advantages of a VA loan is that it allows for 0% down payment. That’s right — VA loans are among the last 0% down home loans available on the market. Additionally, VA loans do not require private mortgage insurance (PMI), which is typically necessary for other loan types when the down payment is less than 20%.

Another benefit is the competitive interest rates. Because the VA guarantees a portion of the loan, lenders can offer more favorable terms. This can result in lower monthly payments and significant savings over the life of the loan.

Due to these significant advantages, the VA loan is a great incentive for veterans to buy rather than rent. You can read more about the advantages of buying vs renting with the VA loan here.

Are There Any Downsides to a VA Loan?

While VA loans have numerous benefits, there are a few drawbacks to consider. One such disadvantage is the VA Funding Fee. This is a one-time payment that the VA requires to fund the VA home loan program. The fee can vary based on the loan amount, type, and military category, but it can be rolled into the loan amount or paid at closing.

VA loans are also only available for primary residences. This means you cannot use a VA loan for a rental property or vacation home. Additionally, some lenders might have more stringent qualification requirements for VA loans than for conventional mortgages.

One other potential downside of the VA loan is that an appraisal is required for the VA loan. In today’s competitive market, buyers are often having to waive contingencies, so using a VA loan can potentially make your offer less competitive. 

How Can I Apply for a VA Loan?

The application process for a VA loan typically involves obtaining your Certificate of Eligibility (COE), choosing a VA-approved lender, getting pre-approved, finding a home, and then applying for the VA loan. The lender will guide you through the process and assist in gathering the necessary paperwork.

Remember, while the VA guarantees the loan, it’s the lender who ultimately approves it. Therefore, it’s important to shop around for the best terms and rates.

Can I Use a VA Loan More Than Once?

Yes, you can use a VA loan more than once, though the process may vary based on whether you’ve paid off your previous VA loan and whether you still own the home. This is referred to as having “second-tier entitlement.” It’s a slightly complex area of VA loans, so it’s best to consult with a VA knowledgeable lender to understand how this might apply to your situation.

VA loans offer a fantastic opportunity for eligible service members, veterans, and select spouses to become homeowners. While they come with specific considerations like the VA Funding Fee and primary residence requirement, the benefits most often outweigh the drawbacks. By understanding what a VA loan is, how it works, and who qualifies, you can make an informed decision about whether it’s the right choice for you. Always consult with a financial advisor or mortgage professional to get advice tailored to your personal circumstances. 

For more on the benefits of the VA loan read about the Top 10 Reasons to Use Your VA Home Loan Benefit here!

If you’re interested in chatting more about buying with a VA loan, let’s grab coffee or set-up a virtual meeting today!

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