If you’re a veteran looking to buy a home, a VA mortgage loan can be a helpful tool. These loans typically have low-interest rates, less-strict lending requirements, and more. Let’s answer some questions you might have about VA loans.
What is a VA loan?
A VA loan is a special type of mortgage backed by the U.S. Department of Veterans Affairs (VA), and is available only to members of the armed forces. It was designed to help veterans secure housing. The relaxed requirements are a direct result of these loans being backed by the VA. The VA agrees to cover some of the loans should a veteran be unable to make payments.
What are the Benefits of a VA loan?
No down payment is required. Though there is no down payment required, many veterans do end up putting something down, as it’s a smart money move.
No mortgage insurance. There is no mortgage insurance on VA loans.
Low closing costs. The lenders who work with the VA have their closing costs capped at one percent.
What are the Downsides of a VA loan?
Must serve in the military. This loan is only for military members who meet the minimum service requirements (at least 90 days of active duty).
Funding fee. Veterans who apply for a VA loan must pay a funding fee of 0.5% to 3.6%. This fee is used to offset the cost of the loans to taxpayers.
This post was published in partnership with our partner SavvyMoney. Original author: Chris O’Shea