Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 9, 2012

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There are several benefits of a Veteran’s Affairs (VA) loan, most of which pertain to the qualification requirements. Those benefits include low qualifying credit, no down payment, pre-qualification, spousal support, and easy reselling.

Additionally, if a VA loan borrower falls behind on his or her payments, the program steps in to help by offering VA-sponsored mediation services. This allows for negotiations to be conducted before foreclosure and eviction occur, which can be the difference between a veteran keeping or losing his or her home.

Here are some more detailed explanations of those benefits.

  • Low qualifying credit: Since this type of borrowing is protected by the government, applicants with less than perfect credit scores are still able to get a great rate. Non-veteran applicants with poor credit would likely be forced to pay a high deposit or a high interest rate for their mortgage.
  • No down payment: VA loans are guaranteed, which means that the lender is guaranteed payment even if the borrower defaults. Since a lender will receive repayment in some form, it is able to offer better interest rates and offers to borrowers without the need for a down payment. However, there are exceptions to the rules. Since the government does not lend money itself, it is  up to the individual lender to decide whether a down payment is necessary. For those who identify a lender that will permit no down payments, applicants can borrow with no money down up to the VA’s maximum for each specific county. Those maximums range from an average of $417,000 to a peak of $1,094,625. Since VA loans are fully financed and no mortgage insurance is necessary, the entire mortgage interest payment is tax deductible.
  • Pre-qualification: When a property is approved, the process is near final, but at the initial pre-qualifying stage, a homeowner can still shift their plans. Even those who do not have a location picked out are still able to pre-qualify for a VA loan. It is important to pre-qualify for a VA loan since doing so lets borrowers discover exactly how much of a house they can afford.
  • Spousal support: Surviving spouses of veterans who either died in war, causes of war, or are missing in action, are able to apply for the VA loan themselves. Due to rules of association, which can be broken in the unfortunate case of divorce, spouses are able to access the same mortgage benefits as veterans.
  • Easy reselling: Although there are limitations for buying a home with a VA loan, there are few when selling a VA-approved home. A veteran’s home may be sold to non-veterans and veterans alike. If the loan was closed after March 1, 1988, the qualifications of the assumers must be approved by the Veteran’s Affairs and Lender.
  • Mediation Services: The last thing the VA wants it for a veteran to lose his or her home. Although finding a reasonable payment plan is part of establishing a new mortgage, the VA offers several Regional Loan Centers across the country to assist with financial counseling if payment becomes an issue. The VA wants to prevent foreclosures so it will advise how to contact a mortgage lender and resolve payment issues.  

Since its start in 1944, the VA loan program has guaranteed over 20 million home loans. Although it is unavailable for most citizens, the program offers great benefits to those who risked so much for the United States.