What is a VA Loan?

What is a VA Loan? – Overview

The US Department of Veterans Affairs (VA) is the prime government organization that takes care of all veteran’s needs.

From providing affordable healthcare and rehabilitation to helping veterans cope with challenges in civilian life, the VA handles things extremely efficiently.

The department also offers loans to ex-service members for various purposes, including loans to buy or refurbish their homes to be more disabled-friendly.

Service members and veterans alike can apply for the VA home loan. This is the only form of loan which does not require the recipient to make any down payment and does not consider credit score to be part of the eligibility parameters.

Tens of thousands of qualified service members and veterans use VA loans each year to buy a home for themselves and their families.

Let’s take a detailed look at some of the major factors you need to know about VA loans.

How does the VA Loan work?

The US federal government collaborates with reputed private insurance companies so they can offer special benefits to active and retired military members.

The Department of Veterans Affairs assures a portion of every VA loan so that the borrower does not need to make a down payment nor do they need to pay for private mortgage insurance.

The VA home loan is useful if you plan to buy a house that you will use as your primary residence. This VA loan is not offered to those seeking to buy a second home or invest in property.

The loan is solely for the borrower to pay for buying a new home, to remodel the existing home or to make their home more disable-friendly.

Veterans and service members can receive more than one VA loan during their lifetime.

What is the difference between VA Loan and Conventional Loan?

Usually, mortgage companies do not approve home loans for applicants with a credit score of less than 620. However, you can successfully get a VA loan irrespective of your credit score.

What is the difference between VA Loan and Conventional Loan

What is the difference between VA Loan and Conventional Loan

Besides, a VA loan does not require you to make any form of down payment. The VA loan also does not entail paying EMI every month. The lender also foregoes the miscellaneous additional charges that conventional lenders usually charge to borrowers along with the minimum down payment.

However, there is a common misconception that VA loan interest rates are usually less as compared to conventional types of loans. To find the actual cost of the VA loan, you should focus on the annual percentage, rather than the stated interest rate.

What are the Eligibility Requirements for a VA Loan?

Usually, the VA loans are only offered to members who have served in the Army, Air Force and Navy, Coast Guard or the Marine Corps after 1940. Your service tenure should be more than 181 continuous days during peacetime or a minimum of 90 days of service during wartime.

Service members who have been dishonorably discharged and those who did not serve for the minimum duration are not eligible to get a VA loan.

In addition, if you have been a member of the National Guard and a Reserve and served actively for at least 90 days, or if a service member has been discharged due to service-related injuries, then you can also qualify for the VA loan.

To apply for the VA loan, you will need to submit a certificate of eligibility. To do this, you can either apply for the certificate of eligibility online, by mail or request your VA lender to post it to you.

Besides active and ex-service members, VA loans are also offered to surviving spouses of service members who lost their lives on active duty, or suffered from a service-related disability, became a prisoner of war or even for those whose spouses were declared missing in action.

Apart from being a service member, you will also have to ensure that you fulfill the minimum financial requirements, such as the ability to repay the mortgage. In this, even if you filed for bankruptcy two years ago, you are still eligible to apply for a VA loan.

How to apply for a VA Loan?

The Veteran Affairs department does not issue the loan directly. Instead, you will need to approach a mortgage lender, credit union or bank.

Although not every lender will comply with VA loans, numerous lenders do it. There are even lenders who specialize in offering VA loans.

What is the maximum amount loaned through VA Loans?

According to the latest directives, there are no clear limits on how much you can receive as a VA loan. However, based on your VA entitlements, the department or lender restricts how much you can borrow without a down payment.

In addition, your specific total loan amount from the VA will depend on the amount you can afford to repay, determined by your income and debts.

What are the benefits of VA Loans?

These are the express benefits you get when you receive a VA home loan:

  • No PMI
  • No maximum loan amount limit
  • No down payment needed
  • No minimum credit score required
  • Easy refinancing
  • Loan modifications are available.


The VA loan is incredibly helpful for active and former service members to buy their dream home. This is an easy and affordable way to finance a new home, remodel the existing one or make your residence more disabled-friendly.

To find out if you qualify for a VA loan, we advise you to consult with the nearest VA lender or to contact your local VA office.

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