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A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs (VA). Its purpose is to offer long-term financing to eligible American veterans or surviving spouses (provided they do not remarry). This program is to provide home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment. Eligible areas are designated by the VA as housing credit shortage areas and are generally rural areas and small cities and towns not near metropolitan or commuting areas of large cities.
The VA loan allows veterans 103.15 percent financing without private mortgage insurance or a 20 percent second mortgage and up to $6,000 for energy efficient improvements. In a refinance where a new VA loan is created, veterans may borrow up to 90% of reasonable value, allowed by state laws. In a refinance where the loan is a VA loan refinancing to VA loan (IRRRL Refinance), the veteran may borrow up to 100.5% of the total loan amount. The additional .5% is the funding fee for an VA Interest Rate Reduction Refinance.
VA loans allow veterans to qualify for loans amounts larger than traditional Fannie Mae / conforming loans. Patriot Home Mortgage can help walk you through this process to gain access to this incredible resource available to American veterans.