By: Mike Buckner
VA stands for Veterans Affairs or, sometimes, Veterans Assistance. There are many ways in which a government tries to help their veterans including providing them with affordable housing. Learn more about what this type of loan is and decide if it is right for you.
What is a VA Loan? — The Basics
A VA loan allows a military veteran to purchase a home without making a down payment. The amount of this loan can be over $400,000 currently, though this is subject to change as real estate prices rise and fall. This amount is the same throughout most of the United States with just a few exceptions. Also, the maximum is still calculated against your ability to pay (or the combined ability of a couple) just like with a regular mortgage. These lending arrangements are widely available through traditional banks and brokers.
This type of loan is also protected so that the lender will not lose out if the owner is unable to make payments. The main stipulation is that the veteran buys this house to live in, not as a source of rental income. If he cannot find a house that fits into the price range provided, he can ask Veterans Affairs to help him locate one.
Most people think of specialized loans and wonder what kind of pit they are being lured into if they sign on the dotted line. The fact is that VA loans were set in place 70 years ago as men and women were coming home from the Second World War in need of places to live and start or build their families; places to rebuild their lives following the end of their time in service, sometimes with disabilities to adjust to.
When they did so, the government aimed to make this process as easy as possible. There are no hidden strings or pitfalls to be concerned about when considering a VA Loan. Getting a mortgage is a simple and transparent arrangement, one which looks much like a regular civilian loan. There are very few stipulations except regarding price, although the prices established by the government are realistic. Consumers do not have to watch out for hidden fees or penalties except those associated with a conventional mortgage and laid out in the mortgage contract. Interest rates are no higher with a VA loan either.
A veteran can buy just about any type of dwelling including a modular home with land attached (if it is over a particular size) or a condominium. The borrower does not have to be married or have a family to buy a house so long as he plans to live there.
He or she can even purchase a repossessed home, taking advantage of a low price to get a home which he might not have been able to afford otherwise, or just enabling him to stay in a neighborhood where regular houses are generally more expensive than elsewhere. That money can also be used to buy a rundown place and fix it up.
Veterans can also utilize other funding options set up independently state by state, if they exist, which can give them a financial boost in an especially hard market, or if they lose their home during a divorce.
It is important to note that not all veterans are eligible. Eligibility is decided based on the veteran’s need. Check your status with Veterans Affairs to find out if there is anything holding you back from receiving financial assistance. The other question is why you left the navy, army, air force or marines. If you were told to leave, this could pose problems when you apply for financial help.