VA Loan Primer

The Department of Veterans Affairs (VA) supports specific home loans. These are called VA Loans and are available to veterans or active duty service members wishing to purchase a home. Since its inception, the VA loan program has helped nearly 18 million veterans and active duty service men and women achieve homeownership.

Photo of a front door knocker
Could the key to getting your first home be located in this VA Loan Primer?

Veterans can use this VA loan calculator to determine eligibility. With those flexible eligibility requirements and competitive loan terms, it’s easy to see why a VA loan is ideal for many veterans.

VA Loan Benefits

Because the VA ensures 25% of each VA loan, VA-approved lenders provide eligible loan recipients with a variety of benefits they wouldn’t be able to find with a conventional home loan. Benefits of the program include:

  • Zero down payment
  • Competitive mortgage rates
  • No required mortgage insurance
  • Flexible debt-to-income ratios

Do I Qualify for a VA loan?

VA loans are usually easier to qualify for than most conventional loans. In fact, 80% of veterans who were denied a conventional loan were able to obtain a VA loan. To qualify for a VA loan, applicants must meet the initial following criteria:

  • Have served 181 days on active duty or 3 months during wartime or have served for 6 years in the National Guard/Reserves
  • Have a Certificate of Eligibility (an approved lender can help the applicant file for a certificate)

Although the VA loan program requires no income or credit requirements, most VA-approved lenders prefer a mid-range credit score of at least 620. If a potential borrower has doubts about their eligibility, they are encouraged to still apply as even borrowers with a history of bankruptcy and foreclosure have been approved in the past.

Other Loan Options

For interested home buyers, there are other financing options available. FHA and USDA Loans also provide similar benefits but allow for a more diverse borrower base.

The FHA home loan program offers programs to help borrowers purchase their first home, renovate a fixer-upper, or even update their current home to be more energy-efficient. FHA even has a financing option for manufactured housing and mobile homes.

For those interested in rural housing, the USDA provides two types of loans. First is the Guaranteed Housing Loan. Second is a more flexible option, the Direct Housing loan, for low-income households. Benefits for both of these programs include:

  • Zero or low down payments
  • No mortgage insurance
  • Lenient credit guidelines

As with the VA loan program, a credit score of at least 620 is desired for these programs as well. However, potential FHA or USDA borrowers are encouraged to apply even if they have less than perfect credit.

Author: James Kelley of VA Benefit Blog is a law school student at the University of Missouri, James Kelley works to educate the public on government financing options for home purchases. James works for, the premier source for achieving your dreams with a USDA loan.