Mortgage Options for Veterans

    The Department of Veterans Affairs (VA) assists active-duty military members, veterans and surviving spouses who wish to buy a house. The VA offers loans with fewer fees and competitive interest rates that can help military families afford to buy homes in a variety of financial circumstances.

    Eligibility
    Active-duty military members, reservists, National Guard and veterans are eligible for VA loans. Spouses of military members who died on active duty or as a result of a service-related disability are also eligible.

    Active-duty members of the military usually qualify after they have served for six months. Reservists and members of the National Guard are typically eligible to apply after six years, but they become eligible after 181 days of service if they’re called to active duty. If they serve during a war, active-duty members, reservists and National Guard members become eligible after 90 days of service.

    To apply for a VA loan, the borrower needs to obtain a Certificate of Eligibility (COE). In many cases, a lender can obtain the COE on behalf of the borrower.

    Loan Terms
    A VA loan is issued by a private lender and is guaranteed by the Department of Veterans Affairs. Since the loan is guaranteed, the borrower is not required to obtain mortgage insurance. This can save military members and veterans hundreds or thousands of dollars every year. A borrower doesn’t need to make a down payment to qualify for a VA loan.

    VA loans do require a one-time funding fee for applicants. The fee amount depends on the type of veteran and whether he or she is making a down payment. Fees for reservists and members of the National Guard are slightly higher than those for active-duty members of the military. The fee is lower if the borrower makes a down payment.

    Although the VA doesn’t require a minimum credit score to qualify for a loan, individual lenders do have requirements. Borrowers must also prove that they have enough income to cover the mortgage payments, and they shouldn’t have too much debt. The guidelines are, however, more flexible than they’re for private loans. Lenders will consider a borrower’s overall financial circumstances.

    The amount an eligible veteran can borrow depends on the location of the house. A VA loan can only be used to purchase a primary residence, not to buy or refinance a vacation or investment property.

    The VA offers assistance to borrowers who are having trouble making their mortgage payments. It can negotiate with lenders directly to help struggling borrowers. Veterans may be able to work out alternate payment plans or modify the terms of the loan to avoid foreclosure.

    Valuable Assistance for Military Families
    Veterans who have served their country are eligible for many benefits, including assistance with buying a home. The VA offers loans with many attractive features—such as no down payment, no mortgage insurance and competitive rates—that can save veterans thousands of dollars compared to traditional loans so they can realize their dreams of homeownership.

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