VA loans are loans guaranteed by the Veterans Administration for qualified veterans. To determine if you are qualified for a VA loan, contact your local VA office for an eligibility certificate. VA loans do not require the borrower to make a down payment. Not unlike FHA and HUD, the Veterans Administration does not loan money. Instead, they guarantee the loan. The guarantee means the lender is protected against loss if the borrower fails to repay the loan. When you are shopping for a VA loan, it is extremely important to choose a lender that knows how to originate VA loans.
VA loans typically:
- Require no down payment
- Require a funding fee that can range from 1.25 percent to 3 percent of the loan amount, depending on whether the borrower is a first-time or subsequent user of benefits
- Require no mortgage insurance premium