As with any mortgage, when considering a VA home loan, you’ll want to consider various factors such as eligibility, fees, closing costs and interest rate. Additionally you want to know about the terms you qualify for, the length of your loan, and the reputation of your VA home loan lender. We’ll dive into the specifics of each of these here for you.
Key Takeaways
- A VA home loan, also called a VA loan or VA-backed home loan, is a specific mortgage available to U.S. veterans or servicemembers and eligible family members.
- You’ll have to qualify and prove your eligibility for a VA loan by obtaining and providing a Certificate of Eligibility (COE) to your lender.
- If you want to learn more about VA home loans, you can speak with a loan officer to ask questions and know if it might be a fit for you
First, what exactly is a VA home loan?
If you’re a U.S. veteran or servicemember, you may have heard about VA home loans and be interested in learning more about how to leverage their benefits. A VA loan, also known as a VA home loan, is a type of mortgage that helps Veterans, servicemembers, and their families buy and keep homes. Some specific guidelines and details are overseen by the U.S. Department of Veterans Affairs (VA). You can learn more about VA loans in our VA loans guide.
VA home loan eligibility
The first step is determining if you are eligible for a VA loan. In addition to the typical application, credit history review, and income documentation that most mortgage lenders require, you’ll need to get and show your COE to confirm that you are eligible for a VA home loan. Learn more about a COE and how to get one here.
VA home loan fees and closing costs
VA loans have fees and closing costs associated with them, just like any other mortgage, including to cover administrative costs for originating the loan, such as appraisal and title fees. With a VA home loan, you generally have to pay a one-time, non-refundable funding fee. In most cases, you can roll the VA funding fee into the loan, adding to your overall loan amount.
Typically, the VA funding fee will be a percentage of your total loan amount. Your funding fee amount is based on the loan purpose, your down payment amount, your service history, and if you’ve used your VA loan eligibility before. Some examples of when you may be exempt from paying the funding fee include if you get VA compensation for a service-connected disability, are the surviving spouse of a veteran who died in service or from a service-connected disability, or are an Active-duty Purple Heart recipient.
VA loan interest rates
While several parts of VA home loans are standardized to help ensure access to homeownership, interest rates still vary by lender. As with other mortgages it's a good idea to request a prequalification from a lender like USAA Bank to see what loan amount you're prequalified for, your qualifying interest rate, and the terms of your VA loan. This can help you begin your home search with more confidence. Mortgage rates change, just like all interest rates, so getting prequalified can help you understand what purchasing something in that price range may look like.
VA loan length
Typically, a VA home loan will be either 15- or 30-year mortgages. However, you can also get 10- or 20-year option with a VA loan. Interest rates may vary depending on the length. Speak with your loan officer to see what options are available to determine which might best fit your needs.
Working with a trusted VA home loan lender
You will want to work with a VA home lender such as USAA Bank that is experienced with providing VA loans. They’ll have loan officers who can help answer questions you may have about getting a VA loan.
Is a VA loan always the best option if you qualify for one?
It depends. VA home loans offer many benefits, including little to no down payment, a limit on closing costs, and no private mortgage insurance (PMI). If you don’t have a 20% down payment saved, you may want to consider a VA home loan or other mortgage options that don’t have PMI or offer a lower down payment. Speaking with a loan officer is the best way to understand different mortgages and help you decide what may be the best fit for you.
Tools and resources provided by USAA Federal Savings Bank should be considered general advice and for informational purposes only. All information is subject to change without notice and may not apply to all members. Products, services or features mentioned may not be offered by USAA Federal Savings Bank. The information contained is not intended to represent any endorsement, expressed or implied, by USAA Federal Savings Bank or any affiliates.
Learn more about VA loans
A VA loan is a great option that many servicemembers and veterans use to buy a home. If you’re interested in learning more about VA home loans or want to ask questions, submit your information today to speak with a loan officer.
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