What Is A VA Loan?

What Is A VA Loan?

Understanding The VA Home Loan Program

The best way to understand the VA Home Loan program is to compare to a standard mortgage, or even an FHA mortgage. For example, when you qualify for an FHA mortgage, there is a monthly fee as a percentage added to your payments as a form of mortgage insurance. This helps the FHA to offer mortgages to people who may not normally qualify for them. With the VA Home Loan program, there is not a monthly mortgage insurance premium, which makes it almost negligible.

Another convenient feature of the VA Home Loan program is the down payment policy. Standard mortgages can require as much as 20 percent or more of the purchase price down when you buy your home. Even an FHA mortgage requires some kind of down payment, which could cost as much as five percent of the purchase price. The VA Home Loan program does not require any down payment; no matter how much money you are borrowing. It is just one way that the Veteran's

Administration helps keep your cost of ownership down.

Anyone who has gone through the standard or FHA mortgage process knows all about closing costs. Some lenders will allow you to roll the closing costs into your mortgage, but that will raise your monthly payment significantly. When you use the VA Home Loan program, the veteran is only responsible for portion of the closing costs. This is yet another way that the VA Home Loan program lowers the overall cost of ownership for veterans and makes home ownership possible.