A VA Loan is a mortgage guaranteed by the US Department of Veterans Affairs. The loan may be issued by qualified lenders that complete the necessary documentation requirements issued by the VA. The VA Loan is designed to offer long-term financing to eligible veterans or their surviving spouses that have not remarried. The intention of the VA Home Loan Program is to provide a financial benefit for those that have served our Country in the Armed Forces.
The VA Loan allows veterans to purchase a home with no money down, those that qualify can in fact finance up to 103.15% Loan-to-Value (LTV) without private mortgage insurance. Additionally, the VA Program also allows up to $6000 in energy efficient improvements. A funding fee of 1.25% to 3.3% of the loan amount is paid to the VA to cover their costs and insurance; this fee may be financed into the loan (see the higher LTV referenced above). For individuals with a service connected disability rating of 10% or higher, the funding the fee is waived. Because there is no PMI Payment, a VA Loan allows the veteran to apply more of the mortgage payment directly against the principle. When refinancing a new VA Loan, veterans may borrow up to 100% (however most lenders only allow 90%) of the appraised value for a conventional or subprime loan or the maximum LTV allowed under state law. However, when an existing VA Loan is refinanced to a VA Loan, a VA Interest Rate Reduction Refinance (IRR), the veteran may borrow up to 100.5% of the total loan amount. The veteran pays a .5% funding fee for a (IRR) Refinance (See VA Loan Fees and Closing Cost section for more information on fees and closing cost).
The VA Loan programs allow beneficiaries to qualify for loan amounts larger than traditional government backed loans and up to $417,000. However in some high cost areas the loan amount can be much higher. In many instances where the home value exceeds the allowable amount, the veteran can use their entitlement with a VA Jumbo Loan discussed in subsequent sections. The VA will insure a mortgage where the monthly payment of the loan is up to 40% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills.
VA Loan Captain is a Service Disabled Veteran Owned Small Business (SDVOSB) that assists fellow veterans and servicemen obtain a competitive interest rate on VA Loans with world class service. As a company with purpose beyond profits $200 is donated to a veteran focused charity for every loan closed.