A Sneak Peak into 8 Important Elements of a VA Loan

A VA loan is the easiest way to secure a home for a veteran or a military service personnel. As a financing scheme that gives you the option to procure mortgage loans without any down payment, and provides the facility to finance the funding fee as well, it has helped around 21 million veterans purchase a home since 1944. While evaluating monthly installments for VA loans is easy with a VA loan calculator, it may not be easy to remember all the elements associated with this financing program. Here are eight vital elements associated with these loans in case you need a sneak peak inside the program.


#1 Reusability

VA loans offer a total sum of $104,250 of entitlement in most parts of the US, which is divided into primary and secondary entitlement. As long as you continue to pay off your loan, you can use this entitled amount over and over again. Even if you default on the first loan, you can still apply for your second VA loan.

#2 Types of Home

VA loans are there to help you own a home. The primary idea of the program is to help you purchase any ‘move-in-ready’ condition property such as a condo, single-family home, multi-unit property or modular housing. If, however, you are looking to purchase a downtown food shop, working farm or a fixer-upper, the loan is for you.

#3 Occupancy

Your VA backed property is for your personal use, i.e. your primary residence, and you cannot use it for purchasing investment properties or vacation homes. In fact, military personnel securing a VA home loan have to certify that their intention of purchasing the home is to make it a primary residence. Ideally, the agencies require veterans to occupy their VA backed home within 60 days of purchase.

#4 Lender

The U.S. Department of Veterans Affairs only backs up the loan, usually, a quarter of the loan amount, and does not issue it. Instead, there are qualified and approved VA loan lenders that take care of the mortgage process. Consequently, most lenders require you to maintain a credit score of 620 (FICO model), a much lenient figure as compared to conventional loans.

#5 Bankruptcy and Foreclosure

No matter you have a bankrupt account on your credit report, you can still apply for a VA loan, without any additional requirement. Even if you were unable to pay the entire amount of your VA loan and had to experience foreclosure, VA loan benefits will still be available to you.

#6 Mortgage Insurance

Besides zero down payment, you are also not required to pay any mortgage insurance on your VA loan. Not to forget, mortgage insurance is a monthly fee that borrowers have to pay when their down payment is less than 20 percent.

#7 Limit on Co-borrowers

If you have a co-borrower who is neither your spouse nor some other veteran, who would live with you in your home, you will have to pay a downpayment. VA loan programs are unlike a few loans that let you get away with just about anybody.

#8 Prepayment Penalty

VA loans give you the complete flexibility to increase the size of your monthly loan installments anytime. Therefore, with no fixed monthly installment you can pay a lumpsum amount and save a significant amount of interest, something you would have to pay otherwise during the life of your loan.


While the government backs VA loans and allows you to secure the second loan even if you default on the first one, it is not bad to take steps that help you settle your payments on time. Understand the terms and conditions, learn about your funding fee, and take the help of a VA loan calculator to evaluate your monthly payments and the total amount you owe to your lender. When in doubts, never hesitate to call your lender and ask for more information.


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