Veterans Administration Mortgages

As you could probably guess by what they are called, Veterans Administration (VA) mortgages have something to do with the military, but it's a little more complicated than that.

The Veterans Administration is a federal government agency that guarantees mortgages given to eligible military veterans. Notice we said that the VA only guarantees the loans, it doesn't actually lend out the money. The mortgages come from the same lenders that anyone seeking a mortgage would typically go to, but they offer VA mortgages.

OK, you're thinking, that's nice of the government, but I'm a veteran that qualifies for a mortgage without the VA's guarantee, and I plan on paying back my mortgage. So what does this program do for me? Well, VA mortgages' outstanding feature for borrowers is that they often don't require you to put any money down at all when you purchase a home. Or you may be required to put a very low percentage of the purchase price of the home down in certain situations, including when you don't qualify under the traditional guidelines to make the monthly mortgage payments or if you opt for a mortgage other than one in the conventional categories. Did that get your attention? We thought it would. Another benefit is that you usually don't have to pay any points on a VA mortgage, saving you even more. However, you must pay all the other fees associated with a mortgage closing, as well as a funding fee to the Veterans Administration.

Disadvantages? The only real disadvantage to using a VA mortgage to finance the purchase of your home is that you will be limited in the amount that you can borrow from a mortgage lender based on the maximum amount that the VA will guarantee. However, most people that use VA loans to finance their home purchase are not in that housing category anyway. These mortgages offer military veterans a break when it comes to buying a home and enables some to buy a home when they would otherwise be unable to do so under conventional mortgage methods.

Who is eligible? Who is eligible for mortgages guaranteed by the Veteran's Administration? The category is broader than you might think. Military veterans, who meet specific service and discharge from military service requirements, are eligible. National Guard members and military reservists with at least six years of service can qualify for VA mortgages as well.

If you would like more information, you should contact your region's local Veterans Administration office. More information is also available on the Department of Veterans Affairs' web site.