Definition of Veteran/Active Military Home Buyer
Housing programs are available to the brave men and women who have served in the United States Armed Forces during qualifying wartime and peacetime periods, and have performed minimum active duty service requirements. The U.S. Department of Veterans Affairs helps qualified active-duty personnel, Service members, U.S. Veterans, qualified Reservists and eligible spouses become homeowners, and the length of service, service commitment and/or duty status may determine eligibility for specific VA home loan benefits.
History and Origins
Veterans Affairs (VA) home loans are guaranteed by the U.S. Department of Veterans Affairs and are designed to provide housing assistance for services members, Veterans and their families who are looking to purchase homes. The guarantee allows active duty military, Veterans, service personnel, some members of the selected reserve and some spouses to obtain home loans for veterans with favorable terms, reduced closing costs, and without a down payment. Additionally, VA loans don’t require private mortgage insurance.
VA Home Loans are provided by private lenders, such as banks and mortgage companies, and the VA guarantees a portion of the loan, enabling the lender to provide more favorable terms.
Real Life Applications
These programs are not limited to first time homebuyers and the benefits are reusable. VA home loans can be used to:
- Buy a home, a condominium unit in a VA-approved project.
- Build a home.
- Simultaneously purchase and improve a home.
- Improve a home by installing energy-related features or making energy efficient improvements.
- Buy a manufactured home and/or lot.
VA Home Loans are handled by private lenders and although the VA is not involved in the loan approval process, the lender must be approved by the VA and must follow the VA Guidelines for all VA loans. The VA "stands behind" the loan by guaranteeing a portion of it. If something goes wrong and the borrower defaults on the payments, the VA will cover a portion of any losses that might incur. Because of this guarantee, these loans usually provide more favorable terms, including:
- No down payment is required in most cases.
- No Mortgage Insurance required.
- Limit on the amount of origination fees, appraisal fees and closing costs.
- No pre-payment penalties.
The Last Word
VA loans are offered to qualifying service men and women to acknowledge the extraordinary sacrifices they have made to protect our freedom. If you are interested in this option and think you qualify, talk with a qualified lender today.