VA Loans In Depth
What is a VA loan and who qualifies?
In 1944 the U.S. congress passed the GI Bill of Rights to help those who served in the armed forces readjust to civilian life. One section of this bill provided loan programs with no money down and low closing costs to veterans. These loans, called VA loans, for the Veteran’s Administration are not given by the Veteran’s Administration. The government determines the basic guidelines for the loans and then guarantees the loan amount to the lender in case the borrower defaults.
To be eligible to receive a VA loan you must meet one of the following requirements:
· Honorably discharged wartime veteran of WWII, Korean War, or Vietnam with at least 90 days active duty.
· During peacetime, July 1974-September 1980, serve 181 days continuous active duty (may be less if discharged for a service-connected disability).
· For service dates after 1980, complete 24 months of continuous active duty or 90 days in Persian Gulf or Iraq.
· Certain National Guard and Reserve troops may be eligible if they completed 6 years in an active National Guard unit that had weekend drills and active duty training.
· Spouses of veterans may be eligible if the veteran’s death was caused by a service connected injury or ailment.
· U.S. citizen who served in an armed force for a country allied with the U.S.
Proof of service is required to apply for VA loans. To see what proof is needed, and to find answers to other VA loan questions, visit the VA website at www.va.gov.
Being eligible for a VA loan does not guarantee that you will receive one. Your credit history and other factors are still evaluated, but typically, the guidelines are less stringent than with competitive conventional loans. Additionally, VA loans usually offer better rates than competitive conventional loans with little money down, and there are certain closing costs that buyers are not allowed to pay with a VA loan.