What is a VA-Guaranteed Loan?
VA helps service members, veterans, and eligible surviving spouses become homeowners. As part of their mission to serve you, they provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.
VA home loans are provided by private lenders, mortgage companies such as iDirect Home Loans. The VA guarantees a portion of the loan, enabling us to provide you with more favorable terms than you might otherwise qualify for without your VA benefit.
VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.
The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to four times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for at least the asking price. Contact one of our licensed Mortgage Loan Originators for more information about the limits in your county.
VA Funding Fee
Generally, all veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a:
• Veteran receiving VA compensation for a service-connected disability, OR
• Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
• Surviving spouse of a veteran who died in service or from a service-connected disability.
The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve veterans pay a slightly higher funding fee percentage. . Contact one of our licensed Mortgage Loan Originator for more information about loan costs.