If you have served in the military, you are likely eligible for a government guaranteed VA home loan. Backed by the U.S. Department of Veterans Affairs, a VA loan is easy to get (when compared to a conventional loan).
These loans were developed to offer long-term, affordable home financing to eligible American veterans or their surviving spouse (except in cases of remarriage). The VA home loan program’s basic intent was to provide military service-members easy access to home financing when private sector financing was not typically available, and to aid veterans with the ability to purchase property with no money down.
There are four distinct VA loan types. Those are the VA Vendee loan, VA $0 down purchase loan, VA Refinance, VA Interest Rate Reduction Loan. All VA loans are guaranteed by the United States Department of Veteran Affairs.
VA Vendee loans are very different than the other three. It is used to purchase investment property as opposed to property the borrower will occupy and the only VA loan open to civilians. Offered to veterans and non-veterans, the VA Vendee loan is used to aid with the purchase of multi-family REO income producing properties.
The VA purchase can be financed with as little as O% down, and a non-owner occupied VA Vendee purchase can be financed with as little as 5% down. The VA IRRL stands for Interest Rate Reduction Loan. The purpose is to refinance a VA loan with a new VA loan to lower payment, interest rate or both. The VA refinance allows a homeowner to take out equity, consolidate debts, or use the money to rehabilitate or remodel their property. If it is a VA refinance, the property can either be owned free and clear, or one with any kind of mortgage.
All VA loan types will allow for $6,000 of energy efficient improvements to be financed into the loan.
All refinance types and the $0 down VA purchase require the borrower to certify that they intend to occupy the property as their primary residence. This means the Veteran/borrower will state that they plan on living (or currently do live) in the property as thier main home. However, there is also no formal time frame occupancy requirement with a VA loan. Many times veterans struggle in cases where they are unable to sell their current home and desire to rent it out and buy another home. Because of this, VA loans allow you to use the benefit more than once. However, the $0 down VA home loan is intended to be used for a persons primary home, and you must request and qualify to have more than 1 VA loan at a time.
Usually, a VA loan offers the most advantages when compared with other mortgage types. We hope this guide will help you better understand the VA loan process and help you determine which VA loan is the right one for you.