Veteran's Administration Mortgages

Veteran's Administration Mortgages were established to guarantee eligible veterans with home loans. The VA mortgage is a bonus to those who have served their country, however, the credit and underwriting guidelines are strict so that veterans do not undertake mortgage obligations they cannot repay.

Some advantages of a VA loan are as follows: There is no down payment requirement, there is no VA restriction on the loan amount, loan rates are typically below market rate when compared to conventional fixed rate loans, sellers are allow to contribute to the closing costs, and a veteran can own more than one property secured by a VA loan. VA loans also have the added bonus of no prepayment penalties or mortgage insurance.

There can also be disadvantages to VA financing. Keep the following in mind: the seller may not want to pay any of the closing costs, if a veteran defaults on the loan they may be liable for repaying the VA any quarantined amount paid by the lender, and loan processing time is longer than with conventional loans.

To be eligible for a VA loan you must have a certificate of Eligibility. VA form 26-8320 will show the amount of entitlement or guaranty used along with the amount of guaranty available for real estate loans.

As a general rule of thumb, lenders will loan up to four times the guaranty amount without a down payment from the borrower.