1. They’re reusable.
Even if someone has used a VA loan in the past, they’re still eligible for a new loan. Service members can reuse the loan as many times as they like as long as they pay each previous loan off. Furthermore, service members with bankruptcies and foreclosures can still get a VA loan, even if it was a VA loan they foreclosed on.
2. Only certain homes are eligible.
VA loans are primarily designed for move-in-ready homes that will be the service member’s primary residence. While there are a few exceptions, commercial properties, investment properties, and vacation homes are typically ineligible.
3. The VA doesn’t issue the loans.
The VA doesn’t actually provide the loans; they just guarantee the loans (usually up to 25 percent), making lenders more confident and allowing service members to get better terms and rates.
4. No mortgage insurance required.
The VA’s guarantee eliminates the need for service members to purchase mortgage insurance for their loans, saving them thousands of dollars. However, there is a mandatory fee of about 2 percent of the loan amount for VA loan recipients. This fee helps keep the VA loan program going and can be rolled into the loan amount or waived for those with service-connected disabilities.
5. They have co-borrower restrictions.
Having a co-borrower who isn’t the spouse of the service member or another veteran with VA loan entitlement who will also live in the home will require a down payment on the home.Continue reading