Check Your VA Loan Eligibility

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VA Home Loan Benefits

With a VA-backed home loan, the VA guarantees a portion of the loan you get from a private lender. If your VA-backed home loan goes into foreclosure, the guarantee allows the lender to recover some or all of their losses. Since the interest a lender charges is determined by their perceived risk, they’re more likely to offer your better terms.

Lenders follow VA standards when making VA-backed home loans, but may also require you to meet additional standards before approving you for a loan. These standards may include having a high enough credit score or obtaining an updated home appraisal.

VA Backed Purchase Loans  

A VA-backed purchase loan often offers:  

No down payment as long as the sales price isn’t higher than the home’s appraised market value 
Better terms and interest rates than other loan programs from private banks, mortgage companies, or credit unions
No need for private mortgage insurance (PMI) or mortgage insurance premiums (MIP)  
Fewer closing costs, which may be paid by the seller
No prepayment penalty if you pay the loan off early

Interest Rate Reduction Refinance Loan  

If you have an existing VA-backed home loan and you want to reduce your monthly mortgage payments, then an interest rate reduction refinance loan (IRRRL) may be right for you. 

Often called a “streamline” refinance, an IRRRL may help you to lower your monthly mortgage payment by getting you a lower interest rate with no credit check, income check or appraisal. 

You can also use the IRRRL to make your monthly payments more stable by moving from a loan with an adjustable or variable interest rate (an interest rate that changes over time) to one that’s fixed (the same interest rate over the life of the loan).

VA Cash Out Refinance Loan  

If you want to take cash out of your home equity or refinance a non-VA loan into a VA-backed loan, a VA-backed cash-out refinance loan may be right for you.  

Similar to a VA Backed Purchase Loan, the Cash Out Refinance Loan is backed by the VA. In the event of default, the lender is protected from some, if not all, of their losses. 

This means lenders do not need to charge PMI or MIP and can often offer terms which are far more favorable than most other loan programs. 

It is important to note that no one is “guaranteed” VA loan approval. 

You must still qualify for the loan based on the lender's mortgage guidelines. 

The “guarantee” part of the VA loan refers to the VA’s promise to the lender of repayment if the borrower defaults.

Last updated September 23, 2020