What is VA (Veterans Affairs) Loan?

Did you know that the United States government offers special mortgages for veterans and active duty military members? These mortgages are known as Veterans Affairs (VA) Loans. If you are a veteran or currently serving in the military, you may be eligible for this loan. 

But what exactly is a VA Loan, and how does it work? Are there any benefits to getting one? This blog post will discuss what VA (Veterans Affairs) Loans are, who is qualified to get them, and how to get started on the application process.

VA (Veterans Affairs) Loan

VA Loans are a type of mortgage backed by the U.S. Department of Veterans Affairs (VA). The loan is provided by the Department of Veterans Affairs (VA) and is designed to assist veterans who may not be able to qualify for other types of loans. 

The VA offers these loans to active and veteran service personnel and their surviving spouses and disabled veterans who meet certain requirements. Veterans’ home loans can help Veterans, service members, and their survivors to buy, build, improve, or refinance a home.

How Does a VA Loan Work?

The VA loan process is similar to that of a typical mortgage. You’ll need to find an approved lender, check your credit, and complete the application. The difference is that VA lenders will not charge any origination fees, points, or prepayment penalties. 

They provide up to 100% financing on the value of a home. Eligible borrowers can use a VA loan to purchase or build a home, improve and repair a home, or refinance a mortgage.

Types of VA Loans

VA loans are not limited to only one type of home purchase. There are multiple loan options available. Here are the four main types of VA loans:

Home Purchase Loan

The VA home loan can be used to purchase a new home or build a new one. It is also referred to as the “direct” loan and can be used by eligible borrowers in any state. While private lenders issue VA Loans, they are backed by the U.S. Department of Veterans Affairs, which is why they can often offer no down payment, closing costs, or mortgage payments. 

There are no out-of-pocket expenses when using this type of loan, making it one of the most popular programs for veterans and active duty military personnel.

Cash-Out Refinance Loans

The cash-out refinance loan is a great option for homeowners who want to lower their monthly payments, pay off debt, or take advantage of rising property values. The VA cash-out refinance program allows borrowers to borrow money from their home equity and use it for any purpose. 

This includes paying off debts like credit cards and student loans, making home improvements, and purchasing other assets such as cars or boats.

Interest Rate Reduction Refinance Loan (IRRRL)

The Interest Rate Reduction Refinance Loan (IRRRL) is a VA program that can help reduce your interest rate and refinance your mortgage. This loan is available to all veterans who have owned their homes for at least six months and have not refinanced within the past year.

Native American Direct Loan

Finally, the Native American Direct Loan is a program designed to provide home loans for Native Americans who meet certain requirements. Native Americans can use this loan to purchase, construct, or improve homes on federal trust land.

VA Loan Terms

The terms of VA loans are quite favorable compared to other mortgages and even to other federal loan programs. Among the benefits are:

  • No down payment is required unless the lender mandates it or if the home’s purchase price exceeds the established property value.
  • There is no requirement for private mortgage insurance (PMI).
  • The seller pays the closing costs.
  • Borrowers will not have to pay the penalty if they repay their loans early.
  • The VA offers several ways to help borrowers avoid default.
Eligibility Requirements for VA Loan

To apply for a VA loan, you’ll need to meet with a lender and provide information about your minimum active duty requirements. This requirement may vary depending on the service. If you are a veteran, the minimum active-duty service requirements depend on when you served. 

You meet the minimum active-duty service requirement if you are a service member and serve at least 90 continuous days. If you are a National Guard member, the minimum active-duty service requirement depends on the length of time you served.

Didn’t Meet the Active Duty Requirement? Don’t Worry!

What if I didn’t meet the active duty requirements? This is a question many people ask, and the answer is that you can still qualify for a VA home loan. Here are the situations that can help you qualify for a VA loan even if you didn’t meet the active-duty requirements:

  • You were discharged for hardship, at the government’s convenience, or because of funding cuts.
  • You were medically discharged from the military.
  • You were discharged before your enlistment was complete but served a least 21 months.

Can you refinance a VA loan?

Yes, you can refinance a VA loan. You just need to meet the requirements for refinancing your mortgage loan and the VA’s eligibility requirements.

Is there a disadvantage to using VA loans?

Though getting a VA home loan has many advantages, it also has some downsides. While a VA loan may eliminate the need for PMI, you will still have to pay an up-front or rolled-over funding fee.

Can you use a VA loan for investment properties?

Yes, you can use a VA loan for investment properties. The only requirement is that the home needs to be your primary residence, and you must occupy it for at least one year after purchase.

Is there any cost for using a VA loan?

Yes, the VA funding fee is a one-time payment made to the Department of Veterans Affairs that supports the home loan program.


VA loans are one of the most popular home loan options for veterans and active military members. They offer a variety of benefits, including low-interest rates, no down payment or closing costs, and no prepayment penalties.