Unlocking the Benefits of VA Loans: For Veterans and Active-Duty Service Members
Buying a home is one of the most exciting—and sometimes overwhelming—milestones in life. For veterans, active-duty service members and military families, the VA home loan program could offer a more affordable path to homeownership with benefits you won’t find in most traditional loans. Whether you’re navigating the homebuying process for the first time or are already familiar with it, understanding how VA loans work can help you make the most of your benefits.
What Is a VA Home Loan?
A VA home loan is a mortgage option backed by the U.S. Department of Veterans Affairs, designed to help eligible veterans, active-duty service members, reservists and surviving spouses buy, build or refinance a home.
VA Loan Benefits
VA loans come with a range of advantages that set them apart from conventional mortgage options, including:
No required down payment
You can potentially finance up to 100% of your home’s appraised value.
No private mortgage insurance (PMI)
Most conventional loans require PMI if your down payment is less than 20%.
Competitive interest rates
Because they’re backed by the VA, these loans often offer better rates than other conventional loan options.
Limited closing costs
Certain fees are capped or not allowed to be charged to the borrower.
No prepayment penalties
You can pay off your loan early without any penalty.
These features make VA loans especially attractive to first-time homebuyers and those looking to maximize their purchasing power.
VA Loan Eligibility
You may be eligible for a VA loan if you meet one or more of the following VA loan requirements:
- You’re an active-duty service member
- You’re a veteran who meets service length criteria
- You’re a National Guard or Reserve member with qualifying service
- You’re the surviving spouse who meets eligibility criteria
To apply, you’ll need a Certificate of Eligibility (COE), which verifies to lenders that you qualify for the VA loan home benefit.
Understanding the VA Loan Application Process
The VA loan application process is similar to applying for a conventional loan, but with a few key differences:
- Get your COE – You can apply through the VA, or your lender can request it for you
- Choose a VA-approved lender – Not all lenders offer VA loans, so it’s important to find one that does
- Get preapproved – This shows sellers you’re serious and gives you a better idea of what you can afford
- Find a home and make an offer
- Undergo appraisal and underwriting – The VA requires a VA Notice of Value to ensure the home meets its guidelines
- Close on your home – Finalize your VA loan and get ready to move in
Common VA Loan Myths
There are a few persistent VA loan myths that keep some eligible buyers from taking advantage of this benefit:
Myth: VA loans take too long to process
VA loans could close as quickly as conventional ones, especially with a knowledgeable lender.
Myth: You can only use your benefit once
You can use your VA loan benefit multiple times if you meet certain requirements.
Myth: VA loans are only for first-time buyers
You can use a VA loan for your second or third home too, as long as it’s your primary residence.
VA Loan vs. Conventional Loan
When comparing a VA loan vs. conventional loan, VA loans could offer more flexibility and cost savings for eligible borrowers. While conventional loans may work well for buyers with large down payments or unique financial situations, VA loans may remove some of the typical hurdles to obtaining a mortgage, making homeownership more accessible for military families and veterans.
Tip: Check out Service Credit Union’s VA Homebuying Guide for information ranging from confirming your VA loan eligibility to what to expect during your closing.
Other Considerations: Credit Score and Closing Costs
While the VA doesn’t set a minimum credit score, lenders usually have their own VA loan minimum credit score requirements, often starting around 620. Your specific rate and terms may vary based on your credit history and financial profile.
VA loan closing costs are generally lower than with conventional loans, and some fees can be rolled into your loan. In some cases, sellers may also agree to cover closing costs as part of the negotiation. The VA limits the amount that a seller can cover for closing costs to 4% of the home’s appraised value.
Making the Most of Your Military Benefit
A VA loan can be one of the most powerful tools you have on your journey to homeownership. By understanding the VA loan eligibility rules, benefits and application process, you’ll be better prepared to take advantage of everything this program has to offer.
