A VA loan is a mortgage offers through the US Department of Veteran Affairs program. They’re available to active and veteran service personnel and their surviving spouses. They’re backed up by the federal government but issued through private lenders.
Here are 6 Things you didn’t know about a VA loan:
1. They’re reusable. You can use your full VA entitlement over and over again as long as you pay off the loan each time. But you may be able to obtain another VA loan even if you’ve lost one to foreclosure or currently have one.
2. They’re for primary residences only. You cannot use your VA loan benefits to buy an investment property. VA loans are for primary residences, although you can use this benefit to buy a duplex or another multiunit property, provided you live in one of the units.
3. They’re available despite foreclosure or bankruptcy. Service members with a history of bankruptcy or foreclosure can secure a VA loan. Even borrowers who have had a VA loan foreclosed on can still utilize their VA loan benefit.
4. They don’t have mortgage insurance. Mortgage insurance is a monthly fee you pay with other programs when you’re not putting at least 20 percent down. The VA’s guaranty eliminates the need for any mortgage insurance or mortgage insurance premium, helping borrowers save even more money each month.
5. There’s no limit to how much you can borrow. With the VA loan benefit, qualified veterans can borrow as much as a lender is willing to give them, all without the need for a down payment. That’s obviously a huge benefit. Conventional loans often require at least 5 percent down, but down payments on larger loans can easily reach 15 to 20 percent.
6. They don’t have a prepayment penalty. You can make extra payments any time you want, saving you a ton in interest over the life of your loan. Just an extra $100 per month can shave years and tens of thousands of dollars from the balance.