Close up of a for sale sign in front of a home.

The Department of Veterans Affairs Home Loan Basics

The first step toward owning your own home is meeting with a lender to secure a loan. The Home Loan Program, through the Department of Veterans Affairs, is a substantial benefit you have earned with your military service. These invaluable loans require no down payment, no private mortgage insurance, and negotiable interest rates.

Essentially, a VA home loan guarantees the lender they will be covered even if you fail to repay your loan. You get much better financing terms than a traditional home loan. Even if you haven't been approved for a traditional loan, you might still qualify for a VA loan. To find out, call the Regional Loan Center for your area.

Features of Veterans Affairs home loans

Every loan can end up being a little different, but here are the standard features:

  • No down payment. Perhaps you can save or invest what would have put aside as your down payment.
  • 30-year loans. Not only do you have a long time to pay back your loan, but you can pick your repayment method, too. So if you'd rather switch to a graduated repayment, that's a possibility.
  • Negotiable interest rates. You are still looking at the current rates in the market, but you will get the opportunity to write down a number and slide it across the table to your lender.
  • No mortgage insurance premium. Veterans are required to pay the VA's funding fee, but no mortgage insurance.
  • Right to prepay your loan. Rule of thumb — always try to pay off loans early. Not having to pay interest leaves you with additional money to invest in other things. Some loans will penalize you for doing that, but these won't.
  • Assumable mortgage. When you sell the property, you may elect to have a VA-eligible buyer assume your mortgage. If you do, the assumer's qualifications must be reviewed and approved by the lender or the VA.
  • Reduced funding fees. You can elect to finance the funding fee, and if your down payment is at least 5 percent, you are eligible for a reduced funding fee. If you are a veteran receiving compensation, you are exempt from the funding fee.
  • Warranty. You'll get a warranty from the builder, plus assistance from the VA getting the builder's cooperation on homes Veterans Affairs inspects during construction.
  • Leniency. If you are experiencing some temporary financial difficulty, ask Veterans Affairs how they can help.

The Veterans Affairs Home Loan Program has helped thousands of active-duty service members and veterans become homeowners. Now that you're armed with the basics of the Home Loan Program, you can start looking into how to use it to get your dream home.