VA Loans

The VA Loan traces back to 1944 through the original Servicemen's Readjustment Act also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. The GI Bill contributed more than any other program in history to the welfare of veterans and their families, and to the growth of the nation's economy.

With more than 25.5 million veterans and service personnel eligible for VA financing, this loan is attractive and has many advantages. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program.

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

Blemished Credit History
If your credit is less than perfect, VA might be the loan for you. You may qualify for a VA loan even though you have had financial problems.

• Credit scores can be lower than those for a conventional loan. (VA has no minimum score)
• Bankruptcy. You can obtain an VA loan two to three years from the date of your bankruptcy discharge, as long as you've maintained good credit since your debts were discharged.
• Foreclosure. If you keep your credit in excellent shape since a foreclosure, a VA loan will be available to you three years from the final date of your foreclosure.

Competitive Rates & Terms
Even if you have less than perfect credit you still get an "A-paper" like interest rate.

• There is little or no adjustment to the interest rate for an VA loan, as the rates usually vary within .25 percent of a conventional loan.
• A VA funding fee of 2.25% or more is added into the loan balance instead of being paid out-of-pocket. In addition, there is no need for any monthly mortgage insurance premium when your loan to value is over 80% as is the case with FHA and Conventional looans.
• Borrowers can finance 100% of the purchase price.
• Allowable debt ratios are higher than the debt-ratio limits imposed for most conventional loans.

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