This article will discuss in length, all you need to know about the Veteran Mortgage Loan, what it is all about, the requirements, how it works, and how to apply for it. Make sure you read through the article so as not to miss any necessary information. Let’s begin by understanding the meaning of some terms.
Who is a Veteran
A veteran is commonly known as a person who served in the naval military, active military, or air service and has been discharged.
What is a Mortgage loan?
A mortgage loan is a type of loan that gives the lender the right to take your property if you fail to repay the money, this is usually done under an agreement to avoid misunderstanding afterward.
All about Veteran Mortgage loans
Veteran Mortgage loans are loans available for people who served in the naval military, active military, or air service and have been discharged it is also available for the spouses of veterans who are missing in action or being held as a prisoner of war. These loans are covered by the U.S. Department of Veterans Affairs (VA), but that does not mean the loan is provided by them.
The U.S. Department of Veterans Affairs (VA) guarantees the loan, while mortgage lenders offer the loan to the VA. In addition, the VA helps Veterans become house owners. They offer a home loan insurance benefit and many housing-related programs to help you in purchasing, maintaining, or building a house for your personal use.
How does a VA loan work?
Firstly, you will fill out the document provided by the VA to verify your eligibility for the program. You will also receive your entitlement which is the money that the VA covers.
A good thing about the VA loan is that you can get the VA loan without making a deposit and unlike other loans, you won’t have to pay for mortgage insurance because it is covered or guaranteed by the government it. But still, you’ll need to pay a funding fee which is a certain percentage of the total loan you are collecting. The fee keeps the program functioning so that other veterans can use it.
Types of VA loans
VA construction loan: Service members (made up of those who served in the military) who are eligible, can use this loan to build their home.
VA cash-out refinance: This type of loan allows veterans to swap their conventional mortgage with a VA loan. (Conventional mortgages include loans that are not covered by a government entity).
VA mortgage: Allows qualified service members to purchase a home with no minimum down payment.
VA rate-term refinance: Allows service members without an existing VA loan to change their loan term or secure a lower interest rate.
VA rehab and refinance: This can be used by service members to finance the cost of improvements made to the home.
IRRRL loan: This type of loan allows service members to replace a VA mortgage with a VA Interest Rate Reduction Refinance Loan (IRRRL), which can offer lower interest rates.
VA jumbo loan: This type of loan allows veterans to purchase a house that is above the loan limits.
Native American loan: Available to Native American veterans to help them purchase, build, improve, or refinance a home located on federal trust land.
Eligibility requirements for VA home loan programs
Not every veteran qualifies for the VA loan, therefore certain requirements have been set. The following are the requirements based on your line of duty.
- For Veterans
The minimum active-duty service requirements depend on when you served or during wartime.
- For National Guard members and Reserve members
The minimum active-duty service requirements depend on when you served between August 2, 1990, and the present (Gulf War period to present).
- For service members
If you’ve served for at least 90 continuous days (all at once, without a break in service), you meet the minimum active-duty service requirement.
What you need to know about Certificate of Eligibility (COE)
The certificate of eligibility is necessary to show your lender that you qualify for the loan based on your service history and duty status. You may be able to get a Certificate of eligibility if you didn’t receive a dishonorable discharge and you meet the minimum active-duty service requirement based on your field.
How do you request a COE?
- You can request a COE through your lender, by asking your lender to use an online system called Web LGY to get your COE.
- Mailing is another option, and you can begin by filling out a request for a certificate of eligibility (VA Form 26-1880) and mailing it to the address for your regional loan center. You can find the address on the last page of the form.
Please be aware that using mail requests may take longer than requesting a COE online or through your lender.
VA home loan programs for surviving spouses
The spouses of veterans who are missing in action or being held as prisoners of war will need a Certificate of Eligibility (COE) to show your lender that you qualify for this benefit. Keep in mind that you’ll also need to meet your lender’s credit and income requirements to get a loan.
How to apply for the VA loan
You can apply on the official website of the U.S. Department of Veterans Affairs (VA) by clicking here.
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