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The Curious Bag
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VA loans are mortgages available to military veterans that are backed by the Department of Veterans Affairs in case the borrower defaults.
Advantages
The major advantage of a VA loan is that you do not have to makea down payment to get the loan. Not requiring a down payment allows buyers who may not have otherwise been able to get a mortgage to be approved.
Function
The Department of Veterans Affairs backing makes the loan less risky for lenders so the lenders can offer more credit.
Qualifications
You must meet the minimum time-in-service requirements, usually 24 months during peacetime or 90 days in wartime, and not have been discharged dishonorably.
Size
The amount of the VA loan's guarantees is limited. The Department of Veterans Affairs will back 25 percent of the loan up to the loan limit for your location (see Resources).
Fees
The VA charges a 2.15 percent funding fee for borrowers who make no down payment. If you have taken out a VA loan in the past, the fee increases to 3.3 percent. Fees are lower if you make a down payment.
Source:
U.S. Department of Veterans Affairs: Loan Guaranty Service
Bankrate: Conventional, FHA and VA Mortgages Back in Popularity
VA Loans: Mortgage Funding Fee
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