How Does the VA Mortgage Loan Program Work?

Written by: Mike Valles

Veterans have the opportunity to take advantage of special loans that are made available in order to either purchase a home, build one, or refinance one. The VA mortgage loan program provides veterans, along with spouses and children of deceased veterans, with several excellent benefits that help them purchase a home more easily than without it.

According to the Department of Veterans Affairs website, the VA mortgage loan program gives mortgages to several different groups of veterans to enable them to buy a home, or to reduce an existing home loan. The Native American Direct Loan (NADL) Program is designed to provide financing for Native American veterans to buy or build a home on Federal Trust Land. Adapted Housing Grants helps veterans who have service-related disabilities to purchase or build a home, or to modify it to meet the needs of their disability.

Another VA home loan is called the Interest Rate Reduction Refinance Loan (IRRRL), and the Streamline Refinance Loan. This VA loan provides refinancing so that a veteran can get a lower interest rate on their mortgage.

Special Benefits of the VA Mortgage Loan Program

The VA Home Loan Guaranty is actually conducted by private institutions, but backed by the government. In the event of a default on payments, the lender can go to the government for repayment of losses.

The VA Home Loan Program has some special benefits that certainly make it more attractive than ordinary home loans. According to the VA Home Loan Benefits page, the Advantages include:

  • No down payment if the loan is not greater than the appraised value.
  • No need to get private mortgage insurance.
  • Limited closing cost charges, which may also be paid by seller.
  • No early payoff penalty.
  • Possible help to make payments.

VA Mortgage Loans Provide Larger Loan Possibilities

Chris Birk at TheMortgageReports.com, says that recent changes to the VA loan program now make it possible to get both fixed rate loans and adjustable rate mortgages. Also, the amount available for a VA home loan ($729,750) is greater than what could be obtained through a Fannie Mae or Freddie Mac loan ($625,500).

Qualifying for the VA Home Loan Program

In order to be eligible for a home loan from the VA, the military member must have served on active duty for at least 181 consecutive days, or 90 days during the Gulf War (or other conflict or war), says the VA Home Loan Program: Lenders Training Guide. After September 7, 1980, a veteran must have served at least two years (24 consecutive months) during peacetime, or their full period of active duty. Others who are also able to get a VA mortgage include Unmarried Surviving Spouses, Public Health Service, WAC’s, Officers of the Coast and Geodetic Survey.

Applying for a VA Mortgage Loan

The VA mortgage loan guaranty program does not guarantee that veterans will be able to get a home loan. You will be required to meet the lending requirements of the lender, and you will also need to have a Certificate of Eligibility from the VA which shows the lender that you qualify for one. Also, a VA home loan can only be given on homes that you intend to make your primary residence.


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How Does the VA Mortgage Loan Program Work?

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