A quick guide to VA loans

Active-duty service members and veterans may be eligible for a home loan guaranty program offered the Department of Veterans Affairs (VA), for purposes of purchasing or refinancing a home. 

What is a VA guaranteed loan?

It is a loan that is made by a typical mortgage company, savings and loan, or bank, in which the VA guarantees a portion of the loan amount, thereby protecting the lender against loss if the mortgage payments are not made.  The purpose of this program is to encourage lenders to provide veterans with more favorable terms on loans.  For example, allowing the veteran to more easily negotiate interest rates, pay fewer closing costs, avoid having to pay mortgage insurance, and in most cases, not requiring a down payment when purchasing a home.

Who is eligible?

  • Veterans.  You will need a Certificate of Eligibility in order to prove you are qualified to receive a VA loan.  You can either apply online, your lender can obtain the Certificate online on your behalf, or you can apply by mail, by using VA Form 26-1880.

  • Active duty personnel.  An original statement of service signed by the adjutant, personnel officer or commander of your unit or higher headquarters, identifying you and your social security number, as well as your date of entry on your current active duty period and accounting of any time lost during that period must be provided.  

  • Reservists/National Guard Members.  If you are still active duty in the Reserves or Guard, an original statement of service signed by the adjutant, personnel officer or commander of your unit or higher headquarters, showing the length of time you have been a member of the Reserves or Guard is required.  Said statement must document at least six years of honorable service.

    If you were discharged from the Reserves or Guard, you must submit copies of adequate documentation showing at least six years of honorable service.  (Examples of adequate documentation include NGB Form 22 -- Report of Separation and Record of Service, or NGB Form 23 – Retirement Points Accounting, or their equivalents).

  • Some surviving spouses.  You must apply for the Certificate of Eligibility by mail using VA Form 26-1817.  In order to qualify, the veteran spouse must have died after service, and the VA determines if the death resulted from a service-connected disability.

What if you had a VA loan before?

If you still own the property, you may still have remaining entitlement to use towards another VA loan.  

If you have sold the property or paid your previous VA loan in full, or if a qualified buyer has assumed your previous VA loan, your full entitlement would be restored, allowing you to use it again towards the purchase or refinance of another property.

How Do You Get a VA Loan?

The process to obtain a VA loan is similar to applying for any other loan.  First, either you or your mortgage lender will need to obtain your Certificate of Eligibility.  Next, if you are purchasing a home, you will need to sign a contract, and apply for a loan with the lender of your choosing.  An appraisal will then be completed with a VA approved appraiser, to determine the value of the property.  Once the appraisal has been completed, the loan process proceeds as normal and you settle on the property and move in.

Costs of Obtaining a VA Loan

A funding fee must be paid by all veterans using the program, unless you are exempt as a result of disability compensation.  The funding fee amount ranges from 0.5% for interest rate reduction refinancing loans to 3.3% for subsequent users of the program.  In addition, you can expect to pay normal closing costs for the VA appraisal, credit report fee, loan origination fee, discount points, title search and title insurance fees, recording fees, state or local transfer/recordation taxes (if applicable), and survey fees.  You can obtain an online quote of title fees, recording fees, transfer/recordation taxes, and survey fees on our website.

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