The VA loans or the Veterans Administration loan is a mortgage program that was created and designed to help eligible current and former military servicemen to get affordable homes. But don’t be confused with the VA loan, because it is not the Veterans Administration that grants the loan instead it only guarantee the loans obtained by veterans who qualify for the program.
The first requirement for a VA loan would be a good credit standing. And being a veteran is never a guarantee of an approval for a VA loan application. A veteran would also be required to prove his income can handle the monthly mortgage payments.
But if you wish to take advantage of this program and you think you can meet the requirements, this is the best loan available in the market for the people who defended our country. The VA loan does not require any down payment and does not need private mortgage insurance and even extends help to veterans who wish to refinance their home loans.
This program offers a more lenient underwriting than the conventional loans. Another feature of the VA home loan is it is more flexible and a lot of qualified applicants use the VA loan to purchase existing homes. However it can also be used to simultaneously buy a home and improve it. It can also be used to purchase a townhouse or a condominium, to improve a home by making it more energy efficient like the installation of solar or heating system, water heaters, insulation, weather stripping, storm windows and doors and caulking.
The loan can also be used to refinance an existing home loan of up to 90 percent of the VA established value or it may also be used to refinance an existing VA loan to be able to reduce interest rates. It can also be used to buy a manufactured home and/or a lot.
However, qualified applicants also have restrictions and limitations in using the VA loan. For example, VA rule does not allow loans for land which is considered to be unimproved or if the construction of home after purchase is not specified.
Borrower cannot also get a VA loan for a construction or for purchase of a property that will used as an investment, because the VA loan only approve loans for primary residence and the borrower has to prove that he has intentions to live in the property full-time.
Other restriction would be; VA does not allow the purchase of properties which is to be used for business and residential purposes unless 75 percent of the property will be used for residential and only 25 percent of it will be used for the business.
With all the restrictions mentioned above, there is one thing in the VA loan that does not have any restrictions and that is the entitlement which does not have any restrictions as to how many times a VA-backed loan can be obtained. A veteran can buy a house and sell it and then pay off the loan then he can be eligible again for a new VA loan since his entitlement has been restored when he paid off the loan.