What is a VA loan?
A VA Loan is a home loan given to veterans, service members and their survivors to buy, build, improve, or refinance a home. There are still credit and income requirements you will have to meet. However, with a VA loan, you may be offered better terms. In fact, 90% of all VA loans are made with no money down.
VA loans are provided by participating lenders, like Hometown Mortgage, and guaranteed by the U.S. Department of Veterans Affairs (VA). These loans are called VA backed loans. There are three types of VA backed loans.
Types Of VA Loans
(Applied for through a lender)
VA Purchase Loan
To purchase a home with a competitive interest rate.
VA Cash Out Refinance
Allows you to take cash out of your home’s equity. You can use that money to pay for school, pay off debt.
VA Interest Rate Reduction Refinance Loan
This is to refinance an existing VA loan to reduce your monthly payment. (sometimes called a Streamline Refinance Loan)
VA Direct Loans
(These loans are applied for directly through the VA)
Native American Direct Loan
The NADL is for qualified Native Americans who wish to live on Federal Trust Land.
VA Direct Loan
Here are the benefits to acquiring a VA loan as apposed to a conventional loan:
No down payment in most cases
No need for Private mortgage insurance (PMI)
Limited closing costs or closing costs may be paid for by the seller
Low interest on 30 yr. fixed loans (Contact your states regional loan center. below is the link for Arizona.)
You may have reusable benefits
Ability to borrow up to the Federal (Fannie Mae/Freddie Mac) conforming loan limits.
Appraisal not needed on VA Streamline Refinance Loans
As with all loans, you will be subject to credit and income qualifications.
You will also have to apply for a Certificate of Eligibility (COE), which is based on your service history and duty status. You will also need to know and understand what your benefits are. Below are three links to help walk you through applying for a VA loan and how to apply for your COE.
A Loan Limits
There can be a lot of confusion around VA loan limits. In 2021 The limits have changed. It is important to understand that VA loan limits are not a maximum on how much a veteran/service member can borrow. Limits are referring to, at what loan amount will a down payment be required. A qualified veteran with their full loan entitlement can borrow as much money as a lender is willing to give them. This will depend on sufficient income and credit score. A qualified veteran with reduced loan entitlement, usually due to a current VA loan already in place, can borrow up to $548,250.00, in Arizona, before a down payment will be required. Again, sufficient income and credit score will determine how much the lender is willing to loan. The limits are really referring to a veteran’s ability to purchase without a down payment.