6 things to know about the VA home loan

The Veterans Affairs home loan can be incredibly confusing, and it's easy to get overwhelmed with all of the information found on the VA website. So we have broken it down into six basic questions for you: who, what, when, where, why, and how?

*As always, when making decisions that impact your personal finances, make sure you're sitting down with a financial advisor. Most banks have financial advisors on staff who are always willing to work with customers.

1. Who:

Lendee eligibility is determined by service status:

Active duty personnel must have served a minimum of 90 continuous days to be eligible

Reserve or guard members must:

• have six years of service in the selected reserve or National Guard, and
• be discharged honorably, or
• have been placed on the retired list, or
• have been transferred to Standby Reserve or to an element of Ready Reserve (other than the Selected Reserve after service characterized as honorable), or
• still be servicing in the Selected Reserve

Spouses can be eligible as well.

2. What:

The VA home loan program is a benefit for eligible service members and veterans to help them in the process of becoming homeowners by guaranteeing them the ability to acquire a loan through a private lender.

Utilizing the VA home loan, lendees do not make a down payment and are not required to pay monthly mortgage insurance, though they are required to pay a funding fee. This fee varies by lender, depends on the loan amount, and can change depending on the type of loan, your service situation, whether you are a first time or return lendee, and whether you opt to make a down payment.

The fee may be financed through the loan or paid for out of pocket, but must be paid by the close of the sale.

The fee for returning lendees and for National Guard and members of the reserve pay a slightly higher fee.

The fee may also be waived if you are:

• a veteran receiving compensation for a service related disability, or
• a veteran who would be eligible to receive compensation for a service related disability but does not because you are receiving retirement or active duty pay, or
• are the surviving spouse of a veteran who died in service or from a service related disability.

3. When:

Lendees may utilize the loan program during or after honorable active duty service, or after six years of select reserve or National Guard service.

4. Where:

Eligible lendees may use the VA home loan in any of the 50 states or United States territories

5. Why:

Veterans Affairs helps service members, veterans and eligible surviving spouses to purchase a home. The VA home loan itself does not come from the VA, but rather through participating lenders, i.e. banks and mortgage companies. With VA guaranteeing the lendee a certain amount for the loan, lenders are able to provide more favorable terms.

6. How:

Eligible lendees should talk to their lending institution as each institution has its own requirements for how to acquire the loan.