VA loans are the mortgage loans that are guaranteed by the U.S. Department of Veterans Affairs (VA). These loans were designed to provide financial assistance to all the American veterans or their living spouses who have remained unmarried. This direct home loan program has been created to providing home building finance to the eligible veterans and that too at zero down payments. VA loans are often availed by the borrowers who are not able to secure a conventional loan.
The eligible areas have been marked by the VA as the housing credit shortage areas and they are generally the rural areas (small towns or cities). The VA loans have been created to provide for 103.15 financing sans the private mortgage insurance. The veterans can also get a second mortgage finance of up to 20 percent along with $6000 for the expenses made on improving the energy efficiency. In the absence of any PMI, the mortgage payment is directed towards paying up the loan amount, which means bigger loans at the same payment.
For the refinance, in which a completely new VA loan is drafted, veterans are allowed to borrow up to 90% of the reasonable value (this depends on the state laws). If the VA loan is being used to refinance another VA loan (IRRRL Refinance), the borrower is allowed to borrow up to 100.5% on the total loan amount.
The veterans can expect to get qualified for loan amounts higher than the Fannie Mae or conforming loans. Mortgage in such loans needs to be insured by the VA if the monthly installments of the loan are over 41% of the gross income of the veterans.
There are several resources available over the internet that can be used to learn more about the VA loans. These loans are approved for the veterans and their spouses, so it is imperative that the applicant takes note of all the details properly. Careful understanding of the loan terms and conditions along with the repayment schemes will provide a clear picture on the financial commitment that the borrower has to make.
Numerous agencies and financial companies can be approached for help if the veteran is not sure about the application procedure and other procedure involved in securing VA loans.