Veteran Affairs Mortgage

The U.S. Department of Veterans Affairs (VA) has long supported military service members and their families with its VA Mortgage Loan Program. Designed to facilitate homeownership, this program offers significant benefits, including options where borrowers may not need to make a down payment.

Similar to the Federal Housing Administration (FHA) program, the VA Mortgage Loan Program insures mortgages to protect lenders against borrower default. This insurance allows private lenders to offer more favorable loan terms, reducing the risk associated with these loans.

The roots of the VA Mortgage Loan Program trace back to the 1940s, following the passage of the G.I. Bill, formally known as the Servicemen’s Readjustment Act. This landmark legislation was introduced to offer enhanced benefits to U.S. military personnel and veterans, including loan insurance for lenders. Over the years, modifications such as the Veterans Housing Benefits Improvement Act of 1978 and subsequent amendments have expanded eligibility, making the program more accessible to veterans.

Today, the VA Mortgage Loan Program is tailored for active-duty service members, reservists, retired military personnel, and eligible surviving spouses. To apply for a VA mortgage, borrowers must first secure a Certificate of Eligibility (COE), which can be obtained online through the VA benefits portal or by mail. Lenders like New Century Mortgage can assist in acquiring the COE and guiding you through the mortgage application process.

The VA Mortgage Loan Program provides a range of options for both home purchases and refinancing:

• Variety of Loan Options: The VA offers both fixed-rate and adjustable-rate mortgages. For new purchases, borrowers might be eligible for a down payment waiver, provided the home’s sales price does not exceed its appraised value.
• Cost Savings: Unlike FHA loans and some conventional mortgages, VA loans do not require private mortgage insurance (PMI). Additionally, VA loans do not have prepayment penalties, and borrowers can benefit from seller’s credits to reduce closing costs.
• Property Eligibility: The VA program covers a broad spectrum of properties, including single-family homes, 1-4 unit dwellings, condos, manufactured homes, and newly constructed homes.

The Interest Rate Reduction Refinance Loan (IRRRL) is the VA’s streamlined refinancing option, designed to simplify the process of lowering your mortgage rate or converting an adjustable-rate mortgage to a fixed-rate one. This program aims to reduce monthly payments and increase payment stability.

A VA funding fee may apply to the IRRRL, but this fee can often be included in the new loan amount, avoiding upfront costs.

If you have questions about the VA Mortgage Loan Program or need assistance navigating your options, New Century Mortgage is available to provide support and information. The VA Mortgage Loan Program offers a valuable opportunity for veterans and their families to achieve homeownership with favorable terms and minimal out-of-pocket expenses.