A Simple Guide to VA Loans
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In addition to the many civilian loan options on the market, there is one lending opportunity that only military service members can take advantage of, which is a government loan backed by the Department of Veteran Affairs (“VA”). Even with an imperfect credit score, active service members, veterans, and surviving spouses can qualify for this loan category.
The main benefit of this loan is that the VA will guarantee the loan and will pay the lender a certain percentage of the principal in the event of default. Here’s a breakdown of the types of VA loans and information on who qualifies:
Types of VA Loans
The VA Cash Out Refinance Loan allows borrowers to replace their current loan with a new one under different terms. You can take case out of your home equity or refinance a non-VA loan into a VA-backed loan.
A VA Purchase Loan is similar to a standard mortgage. If you choose this option, you’ll be able to buy a property with no down payment. Specific terms may differ according to the lender.
The VA Native American Direct Loan (NADL) is designed for Native American veterans or veteran spouses of Native Americans. It allows borrowers to purchase, construct, or renovate a home on federal trust land.
Who Qualifies?
VA Loans have no down payment, less strict credit requirements, and are available to service members, veterans, and military spouses who meet one of the following conditions:
- Borrower has served 181 days of active service during peacetime
- Borrower has served 90 days in active service during wartime (consecutively)
- Borrower has served 6 years in the National Guard or Reserves
- Borrower has served 90 days in the National Guard or Reserves under Title 32, with at least 30 consecutive days served.
- Borrower is a spouse of a service member who died in the line of duty or because of a disability from their service.
To prove that you are eligible, you’ll need to obtain a Certificate of Eligibility (COE) that connects to proof of your service. The VA’s eBenefits portal allows you to apply for this online. For surviving spouses, you can find more information on what you’ll need to do to get a COE using this information available on the VA’s website.
If you have any questions about VA loans and eligibility requirements, call us at (504) 581-6427. Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Before each closing, we search public records to clarify legal and financial risks for lenders, realtors, and other stakeholders in the real estate transaction process. Our energetic and capable team of real estate title professionals provides accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service.