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What is a VA loan?

What Is a VA Guaranteed Loan?

VA guaranteed loans are loans made by private lenders such as banks, savings and loans, or mortgage companies to eligible veterans for the purchase of a home that must be for their own personal occupancy.
A veteran applies with a lender such as Pac Ally, and once approved, VA will guarantee a portion of it to the lender.  This guarantee protects lenders against loss in the event of foreclosure, up to the amount of the guaranty, and allows a veteran favorable financing terms.  Qualified borrowers can purchase a home with no money down, which is a huge benefit in today’s lending environment.  The VA loan offers big OPPORTUNITY for U.S. Veterans who:

  • Don’t like the idea of having to pay monthly mortgage insurance.
  • Have limited cash for down payment or closing costs.
  • Have little monthly reserves.
  • Are first time home buyers who may not be eligible for traditional financing.
  • Require more flexibility in calculating household income and monthly payment ratios.

History Of The VA Loan

The Veterans Administration (VA) was established in 1930 to provide federal benefits to veterans and their families, including health care, financial assistance, and burial benefits.  In 1944, the Servicemen’s Readjustment Act (known as the “G.I. Bill” was signed into law and provided a variety of benefit programs to facilitate the adjustment of returning veteran’s to civilian life, including federally insured home loans with no down payment.  In 1989, the Veterans Administration was renamed the Department of Veterans Affairs.

Since the VA loan program was first implemented, it has helped millions of veterans and their families become home owners.  Over time, the program has been updated to allow for more veterans to take advantage of this one of a kind unique loan program.

Over the past few years, lending institutions have tightened their guidelines on conventional loans because of the housing market collapse that began towards the end of 2008.  Due to these tighter restrictions, conventional financing requires a higher down payment then in years past.  In many cases, due to a borrower’s less than perfect credit, conventional financing requires a 10% – 20% down payment, pushing home ownership out of the affordability range for many potential buyers.  In light of these changes, the VA loan has remained a never wavering loan program for military borrowers who are credit challenged, or lack the financial capability to meet the tougher down payment requirements of a conventional mortgage loan.

It’s As Easy as 1-2-3

To get started, please take two minutes to provide us with some information: click here.   A VA loan advisor will contact you at your request.

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