Everything you Need to Know about VA Loans

If you’re a veteran or an active United States military member, you are uniquely qualified to apply for a VA loan to finance your home purchase. These non-conventional loans come with some great benefits and are exclusively available to military personnel and their widows. However, they function differently than standard mortgages, with different loan requirements and application processes. Here’s what you should know about using a VA loan to finance your home purchase.

Qualifying for a VA Loan

Even if you are in the military, you must meet specific VA loan requirements to obtain this kind of financing. Active duty service members automatically qualify. Veterans must have been honorably discharged.

Service time must amount to at least 90 consecutive days of service if you served in a war or at least 181 days of active service if you served in peacetime. You must have served for at least six years if you’re in the National Guard or Reserves.

Additionally, all spouses of service members killed in active service are eligible for VA loans.

You’ll need a Certificate of Eligibility to prove that you meet these qualifications. You can get one of these through your mortgage lender, by applying on the VA’s website,, or sending an application to the Department of Veterans Affairs via mail.

The Benefits of a VA Loan

The United States Department of Veterans Affairs partially backs VA loans. Note: the VA does not issue the loans; they just insure them.

Because the U.S. government guarantees these loans, they carry less risk for the lender. That means they are often relatively easy for military personnel to obtain regardless of their financial status. Although the VA has not set a credit score requirement for those who wish to obtain VA loans, individual lenders can still set a financial and credit requirement. The most common requirement is a FICO score of at least 620.

VA loans usually have greater flexibility in loan terms and lower interest rates than other mortgage types. One unique aspect of a VA loan is that you are not required to make a down payment. Another benefit is their repayment flexibility; you won’t be penalized if you choose to pay off your loan early. If you file for bankruptcy or your home gets foreclosed on, this shouldn’t damage your chances of getting another VA loan. You also won’t have to pay private mortgage insurance (PMI), which lowers the monthly payments. Another benefit is that if the interest rates fall, you can usually refinance easily.

The program also has options for home equity refinance and general refinance to lower to a better interest rate.

Downsides to the VA Loan

While VA loans are highly attractive to those who qualify, some drawbacks exist. Borrowers will need to pay a VA funding fee, which is a fee that offsets the costs of funding these loans for US taxpayers. It is a one-time payment done upfront and is a percentage of the total loan amount. As a example, as of 2020 first-time VA loan appliciants with a down payment of 0-5% pay a VA funding fee of 2.3%. However, some service-disabled veterans may be able to waive this fee.

VA loans are only for primary residences. Manufactured housing may be subject to more stringent structural engineering requirements.

Begin Your Loan Application Process

Are you ready to apply for financing for your home?  A North Carolina Local Lender would love to be a part of the process! We are mortgage experts who will ensure you’ve weighed all your options and will get you on the path that’s best for your unique situation. To get started, contact us today!

Updated March 2024