What is a VA Loan and Why Should I Consider Using One?

by | BiggerPockets.com

Asking yourself, “What is a VA loan?” If you have served in the military or are currently serving in the military, you may be eligible for a VA loan. VA loans are provided by lenders who participate in the VA loan program, not directly by the Veterans Administration (VA). There are many different lenders participating in the program that allows them to lend money under the VA loans program, including bigger national banks, regional banks, mortgage banks, and mortgage brokers.

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VA Loans: How to Apply for a VA Loan

If you are a veteran and are interested in getting a VA loan to buy a house, the first step is to contact a loan officer who works at a lender who can do VA loans. When applying for a VA loan, you will need a certificate of eligibility from the VA, and if needed, your loan officer will be able to help you get your certificate.


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VA Loan Benefits: What is a VA Loan and Why Should I Consider One?

Compared with FHA loans, conventional loans and jumbo loans, the VA loan program provides several advantages. Just a few of the advantages of VA loans include:

  • Up to 100% financing. There is no down payment required for VA loans.
  • There are fixed rates and adjustable rates available on VA loans.
  • You can finance the VA funding fee that is required with VA loans.
  • VA loan closing costs are comparable with other types of loans and may even be slightly lower.
  • VA loans do not have mortgage insurance — either up-front mortgage insurance or monthly mortgage insurance.
  • VA loans are assumable.
  • There is never a prepay penalty on a VA loan.

VA Loan Limits: How Much Can You Borrow With a VA Loan?

VA loans do not impose a maximum amount that may be borrow, but they limit the maximum guaranty amount to $417,000 for 2016. They do have a list of counties where a higher limit may apply. To check if your county is on this list, click here. This is somewhat of a simplified answer, and in order to find out the VA loan limit in your area, it is best to speak to a loan officer who can answer your VA loan limit question for your area.


Related: The Comprehensive Guide for Financing Your Very First Real Estate Deal

VA Refinance: The VA IRRRL

For veterans who currently have a VA loan, the process of doing a VA loan refinance when interest rates are low has been made easy through the VA IRRRL (Interest Rate Reduction Refinance Loan) program. The VA streamline is designed to minimize the amount of paperwork associated with refinancing (thus, the word “streamline”) and helps veterans get a lower monthly mortgage payment with minimal hassle.

Still wondering, “What is a VA loan?”

Ask all your loan-related questions — or tell me why you love using VA loans — in the comments section below!

About Author

Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded BiggerPockets.com when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 850,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.


  1. Jason Stratman

    There are also some lenders that will do a cash out refinance up to 100% of the appraised value of the home on a VA loan, when on a standard mortgage the going rate is 70% LTV. I’m actually am currently working with a local bank through a cash out refi on my VA loan for my primary residence, to then re-invest that money into additional rental properties!

      • Jason Stratman

        I’m locked in at 30 year term, 3.65%. With a VA loan you do need to live in the residence for at least 1 year, and from what my mortgage officer tells me, you can only have 1 VA loan at a time. Not sure if that is true for everyone, or just the bank I deal with, because I thought I have heard of people having multiple VA loans as long as the total between them is under the $417,000 Josh mentioned in his article. But at least for the bank I am currently dealing with, yes it would need to be my primary residence, which in my case it is.

  2. Ernest Adams

    It is not clearly understood and why a disservice to veterans either by ignorance of the veteran, lender, realtor or real estate writer when discussing VA home loans that the buyer is steered primarily to single family homes and are not advised or aware that they may purchase a 1-4 unit property as a single veteran buyer and acquire additional units if multiple veterans purchase together with no money down which is divulged in Chapter seven of the VA Lender’s Handbook, http://www.benefits.va.gov/WARMS/docs/admin26/handbook/ChapterLendersHanbookChapter7.pdf

  3. Dolly Caswell

    This posting about VA loans is quite interesting and I’d like to share the problems I’m facing in getting one. Maybe someone knows how I can solve this.

    My husband was a Navy Veteran who served at the tail end of WWII and was honorably discharged in 1946 or 47, long before I knew him. He and I both went through life and finally met in Alaska in 1978, nearly 30 years later. He moved a lot due to his work, and lost his papers, as often happens in life. We had a fabulous marriage in his later years and after 29 years of marriage, joint ownership of assets, etc. he passed in 2006. We had worked hard all our life together and eventually got mature enough to figure out that most debt is not your friend so we were completely debt free after about 15 years of marriage. He had a good job, so did I and when neither partner is throwing money out of the window (spending on nonsense) you can pretty quickly accumulate assets.

    Fast forward to now…interest rates are low, I have no debt, excellent credit and want to get an equity loan on my home. I applied with a local “boutique lender” (not a bank) and she told me I needed a DD214. Knowing the state of affairs of my husband’s (and my) paperwork, I knew I would never be able to find this document so I went online and requested it.

    Several weeks later I received 60 pages of proof of his service in the Navy, but no DD214. Instead there was a letter stating that anyone who got out before Jan 1, 1950 had a different, but similar form and “a copy of this form is enclosed .” I gave the mortgage officer that form “NAVPERS-553 (Rev 8-45). She used it with my loan application and said the VA came back and said they need a “Substitute Member Form #4 for NA 13038.”

    You know where I’m going with this…this Form #4 is not leaping out at me and I’ve gone through this stack of 60 papers numerous times. I’ve called the VA back and waited on hold for up to 48 minutes. They tell me they’ve sent everything and what I need is in the packet of paperwork, but the gal with the lending agency needs something different.

    There is nothing else, I have every piece of paper from the VA associated with his Navy service and none of it satisfies the paperwork requirements. Any suggestions from BP would be quite welcome.

  4. Jonathan White

    I just went through the VA TAPs (Transition Assistance Program) seminar. The # to inquire about home loans is 877-827-3702. General VA benefits are 800-827-1000 or go to ebenefits.va.gov/homeloansLife

    They maybe able to help understand the redtape. I hope you get it figured out since the entitlement is over $400K. Under the Trump Administration, the VA has been shakin up and people get fired for not providing good support..now you maybe to get better help than any other time.

    VA office at Debarr maybe able to point you in a direction also. 907-334-0874

  5. Brian Garlington

    It’s interesting how the VA Loan works….I used it to buy a duplex in 2016 in Oakland, Ca. I get something in the mail at least once a week from different banks offering to re-do my VA Loan, etc.

    I’m in a position where I would LOVE to refi out of the VA Loan on the place I bought in 2016 without paying PMI (I don’t pay PMI now, so why start?) AND use the VA Loan again to buy another duplex, for zero down and no PMI.

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