What is a VA Loan?
The VA Loan became known in 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.
From VALoans.com