A VA loan is a great benefit, but about a third of veterans don't know it's even available to them. And in the two-thirds that do know about the benefit, many avoid it because they've heard all the myths and they're misinformed about how they actually work.
So, how does a VA loan work?
If you've served in the military or National Guard, chances are you're eligible for a VA Loan, which is a home loan available specifically to veterans and active military members.
Despite the name, you don't actually work with the Veterans Administration to get your mortgage when you use your VA loan benefits. The VA's role in the whole process is that they guarantee part of the loan, so banks are able to offer you better rates than if you applied for a conventional loan.
All you'll need to do to get started is find a lender who works with this type of loan. You can check with your regular bank or credit union or you can go with a company that specializes in VA loans, like Veterans United. Once you find your lender, the loan process is almost identical to getting a conventional loan. The main difference is that you will need to get a Certificate of Eligibility to prove that you meet all the requirements to get a VA loan.
Are there fees?
You'll likely save a lot of money by using a VA Loan, but in order to get one, you do have to pay a funding fee. This fee is used to offset any loans that go into default and is paid either upfront or wrapped up into your monthly mortgage payment. The amount depends on a couple of factors like your military category, disability status, and how many times you've used your VA loan benefits. You can estimate your funding fee on our VA loan calculator.
Now you know how VA loans work, you're ready to get into the nitty gritty. Check out our other blog posts on VA loans.