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VA Mortgage loans are a result of the 1994 GI Bill of Rights, also known as the Servicemen's Readjustment Act. This Act allows a veteran to receive a home loan from a private lender without a down payment. The government acts as a backer for your loan and insures the lender against a loss, should you become unable to repay your loan. These VA loans rarely have any sort of down payment and are given at interest rates lower than those available to civilians.
The actual loan application process has three steps. First, you must submit your application for a certificate of eligibility. This certificate will prove that you've served the requisite amount of time and were not dishonorably discharged. Second, you'll need to receive a VA-assign appraisal of the property. Finally, you'll go to a private lender and apply for a loan through the regular process. This process is getting even easier with lenders who process and approve loans immediately.
These VA loans can be used to build a new home, buy a home (and improve it, if necessary), or to buy a manufactured home or lot. If you want to purchase a condominium with a VA loan, the complex must be first be approved by the VA. The maximum amount payable through a VA home loan is $417,000, except for the states of Hawaii and Alaska where the maximum amount is $625,500. The VA will guarantee 25% of these loans. Couple who are both eligible for a VA home loan may apply jointly, but there are restrictions to the amount they may receive. However, if the house is lost in the divorce, a veteran cannot receive new eligibility until the original VA loan is repaid or refinanced.
A VA home loan is a great option, but make sure you don't assume that you're getting the best possible loan. Research your loan options and determine which loan is best for you. Then, take advantage of the VA's assistance.