A VA mortgage is a home loan with no down payment requirement insured by the Veterans Administration (VA) to protect lenders against borrowers who default.
Only veterans are eligible for such loans. And insurance premiums are paid by borrowers.
As a gesture of appreciation for ex-servicemen and women who have contributed to the protection of the nation, veterans have the privilege of having these types of loans exclusive to them.
Subject to criteria and conditions being met, VA loans should be a no-brainer for veteran due to it’s obvious advantageous.
They also tend to be larger in loan amounts compared to FHA loans partly due to it’s no-down-payment policy.
In contrast, FHA loans have a minimum 3.5% down payment requirement. And conventional loans available on the market with zero down payment will usually carry much higher interest rates.
However, because of the general public’s perception that no-down-payment loans tend to be more expensive, lenders of VA loans can sometimes abuse this general mindset.
They sell unsuspecting veterans VA loans with interest rates higher than that of conventional loans. And borrowers accept it without researching the market themselves trusting lenders to treat them fairly and with respect.
So borrowers of such loans should be meticulously careful of being taken advantage of by unscrupulous lenders.
There are certain criteria to be met in order to be eligible for VA loans. These include:
- Military and service history
- Active duty details
- Surviving spouse details
To be eligible for VA loans, a borrower has to obtain a Certificate of Eligibility which can be obtains from the VA website portal.
Finally, as with FHA loans, all VA home loans are assumable mortgages.
This means that they can be assumed by a third party provided the buyer meets certain qualification criteria.