VA Guaranteed Loan

A mortgage loan that’s guaranteed by the U.S. Department of Veterans Affairs is known as a VA loan. These types of loans are available to eligible veterans, service members, and retirees.

VA loans can be used to purchase a home, build a home, or make improvements to an existing home. VA loans are attractive to borrowers because they offer competitive interest rates and no down payment is required. In addition, there’s no private mortgage insurance (PMI) required with a VA loan.

Eligibility for a VA loan is determined by the Department of Veterans Affairs. To be eligible, veterans must have served on active duty for at least 90 days during wartime or 181 days during peacetime. In addition, reservists and National Guard members must have completed at least six years of service. Active duty service members who have not yet completed their service requirements may also be eligible for a VA loan. Once eligibility is determined, borrowers must obtain a Certificate of Eligibility (COE) from the VA. The COE is used to verify to the lender that the borrower is eligible for a VA loan. Once the COE is obtained, the borrower can then shop for a lender. It’s important to note that not all lenders offer VA loans.

When shopping for a lender, borrowers should compare interest rates, fees, and other loan terms. Once a lender is selected, the borrower will need to provide the following documentation:

  • Proof of income
  • Bank statements
  • Proof of property insurance
  • A signed purchase agreement

After the lender has reviewed the documentation, they’ll provide the borrower with a loan estimate. This document will outline the loan terms, interest rates, closing costs, and monthly payments. Once the borrower agrees to the loan terms, they’ll sign a loan application and promissory note. The loan application and promissory note are then sent to the VA for approval.

Once the VA has approved the loan, the borrower will work with the lender to schedule a closing date. At closing, the borrower will sign the final loan documents and pay any remaining closing costs. Once the loan has closed, the borrower will make monthly payments to the lender. The loan will need to be repaid in full if the borrower sells the property, refinances the loan, or moves out of the property.