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How Does a VA Loan Work?

How Does a VA Loan Work
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VA loans are a great opportunity for veterans and active military personnel to get a mortgage with favorable terms. It provides many advantages, making it a desirable option for eligible borrowers.

As a non-conventional mortgage program, it has certain characteristics that you should know before applying for a VA loan.

Who Can Apply For A VA Loan

  • Active-duty service for 90 consecutive days during wartime
  • Active-duty service for 181 days during peacetime
  • Served for 6+ years in the National Guard or Reserves and was honorably discharged, retired, or transferred
  • Spouses of service members who died on active duty or from service-related disabilities, as well as prisoners of war and people who went missing in military-related circumstances

Advantages Of VA Loans

  • No required down payment
  • Low interest rates
  • No mortgage insurance
  • No minimum credit score (although some lenders may have specific eligibility criteria)
  • Limited closing costs
  • No limit on the borrowed amount
  • Borrowers with a history of bankruptcy or foreclosure can apply
  • Not limited to first-time buyers
As you can see, eligible borrowers can enjoy the diverse benefits of VA loans. This is because this program is backed by the government.

In case the borrower doesn’t pay the debt off, the VA (Department of Veteran Affairs) will pay part of it for them. Hence the lenders are more willing to provide less strict loan terms as they have a guarantee that they will get the money back one way or another.

What’s Different About The VA Loan Process

  1. It requires a certificate of eligibility. Before applying for a VA home loan, you need proof that you actually comply with the eligibility criteria. Therefore, the first step is to apply for the VA certificate of eligibility. You can get in contact directly with the VA or request it via a VA-approved lender.
  2. Get preapproved for a loan. During this part of the process, the VA is similar to other types of loans. You have to choose a lender and apply for an estimated loan amount. However, you must know that VA-approved companies often charge additional fees, called funding fees. The overall closing costs, though, remain low due to smaller origination fees and the absence of some other payments.
  3. Go shopping for a house. The house you buy through a VA mortgage must be your primary residence. This means that you can’t get it for investments or vacation homes. Alternatively, you can apply for a VA loan to build your own home, instead of buying one.
  4. Get your home appraised. The VA appraisal is different from the appraisal for other types of loans. The VA has minimum property requirements since they will send an expert to make sure the house you chose complies with their demands.
  5. Close the deal. Once the house is chosen and the paperwork is ready, it’s time to sign the papers and move in. Don’t forget to double-check whether the terms of the deal are comfortable for you and discuss any doubts or concerns with your attorney or mortgage broker.
Want to know more about VA loans­? Call us at (813) 284-4027 to find out more details and apply for prequalification.

Don’t miss your chance to buy your dream home using the favorable terms VA loans offer.

Get Pre-Approved
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