Basics of Veterans Administration (VA) Loans

By Sadiya Anjum

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Veterans Administration (VA) home loans are have obvious gains as they are Government loans. Government loans unlike loans by private companies are designed for the upliftment and benefit of the public; hence by simple logic they are comparatively more beneficial.

To qualify for a veteran loan, the terms for eligibility vary depend on the length of service and circumstances of discharge. Present and former members of the Army, Navy, Air Force, Marine Corps, Coast Guard, Selected Reserves, widows/ widowers of officers who passed away during service etc. can qualify for a VA loan. Members should have been in service for a specific period of time and should not have been discharged because of unfavorable conduct. Not all veterans qualify for a VA loan; it is only those who fulfill the various requirements.

With an eligibility certificate, these loans can be obtained practically from any lender today. These home loans are usually provided if the veteran intends to use the property for his own personal occupancy. The most distinct advantage of a VA loan is the option of zero down payment while obtaining a loan. Even though a down payment is not required, a VA loan does not call for mortgage insurance. Private Mortgage Insurance (PMI) can form a significant percentage of the loan which does not benefit the borrower. With a VA loan, PMI can be easily avoided. Apart from this, the closing costs, appraisal fees etc. are also considerably reduced.

Even with these advantages, there is the other side of the coin to consider. All loans have their weaknesses and so does the VA loan. The VA loan requires a funding fee which may range from 1.25% to 3% of the loan. In addition to this, there is a loan limit that is placed. The process of obtaining a loan will still depend on the usual parameters like the individual’s credit history, income, debts etc. So even if the government eligibility states a certain amount, the individual can obtain only what he is qualified for.

Even though the VA loan has its own drawbacks, it is still quite beneficial when compared to conventional loans. With a significantly longer term period, monthly payments are easier to make and this loan can fit anyone’s pocket. So if one qualifies for a VA loan, then he/ she must give serious consideration to this option.

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