The Loan Guaranty Services of the United Stated Department of Veterans Affairs offers a guaranty program for veterans seeking loans for home building or purchase. The program provides assistance to veterans to enable them to retain and buy homes through a government partial guarantee of the loans. This Veteran Administration Home Loan guarantee is often made in lieu of a substantial down payment which is helpful to those who cannot afford making the down payment. As part of a veteran support program there are several eligibility requirements that need to be fulfilled to receive coverage from the program. Veterans and other qualified individuals may check with their local VA offices or through VA loan program experts if they are eligible to receive a loan under the program.
How the Program Works
The main idea behind the program is that the government, through the Veterans Administration, guarantees or “stands behind” the loan so that if the borrowers can no longer make the payments, the lender can goes to the VA to cover any loses caused by the loan. The loan itself does not come directly from the government but the system makes VA loans for veterans possible for those without the means to provide the often substantial down payment, or who would not be approved for a loan without the backing of the VA.
Advantages of the VA Loan
The primary advantage provided by the Veterans Affairs home loans program is that a veteran can buys a home without down payment, since the price of the property does not exceed the apprised value. Closing costs are also reduced because of the limits imposed by the VA and can also be paid for by the seller depending on negotiations of the sale price. No penalty fees can also be charged to the borrower if the loan is paid of early. And finally, the VA may be able to provide some assistance if the veteran has some difficulty making payments.
A VA home loan does not require the veteran to be a first-time home buyer and the benefit can be reused and the loans itself are assumable by person that is qualified. There is no maximum loan amount or the VA but there is a maximum amount of that can be guaranteed depending on the location of the property. VA approved lenders decide if the prospective veteran borrower through calculating the debt to income ration of the borrower or doing a residual income calculation. Asking the VA-approved lender is one best way to learn how large a loan a particular veteran can qualifies for.