A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs and given to active-duty military members and others who have served. It can be used to buy, build, renovate or refinance a home.
VA loans have terms that can be much more favorable than those of conventional loans. They do not require a down payment, and they typically have lower interest rates and closing costs. They do not require private mortgage insurance, which can save borrowers hundreds of dollars a month on their mortgage costs.
That said, borrowers pay a special lending fee, which can be a percentage of the loan. It must be paid upfront or rolled into the loan, and homes must meet certain health and safety standards, which can limit options.
To qualify, borrowers must have served on active duty for a minimum amount of time, depending on when they joined their service. For example, borrowers currently in the military must have served for at least 90 consecutive days. Veterans who joined between August 2, 1990 (during the Gulf War) and today must have served at least 24 continuous months or the full period they were called to active duty (at least 90 days).
The VA loan program is a lifetime benefit that can be used multiple times, and surviving spouses can also use it.
