VA home loans are a fantastic way for military service members, veterans, and their families to purchase the home of their dreams. There are several VA loans available, and each has its own purpose and eligibility requirements. Not only are these loans available for purchasing a home, but you can take advantage of VA home refinance to get better mortgage rates for an existing home.
Any VA-backed mortgage will require you to meet eligibility requirements. These qualifications include military service and personal requirements. Continue reading to learn about each type of VA loan, how to qualify, and how to apply.
VA home loans help veterans, military service members, and families build, purchase, and refinance a home within the United States. Buying any home requires a significant financial commitment, but these loans provide flexible financing options and, in most cases, better mortgage rates than other lenders.
In addition to lower VA loan rates, buyers are not required to make a down payment if approved for a VA loan. This unheard-of benefit saves buyers thousands on upfront costs. Most traditional lenders require borrowers to make a down payment of 10 to 20 percent, and even FHA loans require down payments of at least 3.5 percent.
The two types of VA home loans are VA Direct Loans and VA Backed Loans.
VA-backed mortgages are the most common. In these cases, the VA does not directly issue the loan. Instead, VA mortgage rates and VA refinance rates are secured through mortgage lenders that the government has approved. Since the VA backs the loan, the lender is protected from financial loss and can offer better rates and more accessible qualifications. These loans include:
Purchase Loan: If you need a VA loan to purchase a home for your primary residence, you will most likely need a purchase loan.
Cash-Out Refinance Loan: If you’re looking for a way to refinance your home, the Cash-Out Refinance Loan refinances your loan by replacing your current mortgage lender with another. Additionally, this loan can be used to upgrade an existing home.
Interest Rate Reduction Refinance Loan: The Interest Rate Reduction Refinance Loan lets qualifying applicants refinance their mortgage to obtain better VA refinance rates, change the length of their loan, or change an adjustable-rate mortgage (ARM) to a fixed rate.
Currently, there is only one type of VA direct loan. The Native American Direct Loan (NADL) is available to qualifying Native American military service members, veterans, and their families. However, because the VA finances the loan, there are additional requirements that applicants must meet to qualify.