Guide to VA Home Loans: How They Work, Who Qualifies

VA loans are for current and veteran service members, as well as eligible spouses. VA mortgages have competitive interest rates and usually require no down payment.
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If you've served in the military and need a mortgage, then a VA loan might be right for you, whether you're buying a home or refinancing. Here's what to know.

What is a VA home loan?

A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs and issued by a private lender, such as a bank, credit union or mortgage company. A VA loan can make it easier to buy a home because it typically doesn't require a down payment.

Only qualified U.S. veterans, active-duty military personnel and some surviving spouses are eligible for VA loans. The 1944 GI Bill of Rights established the VA home loan program to help veterans get a foothold in civilian life after World War II.

You might find it helpful to go with a lender and a real estate agent who have experience working with VA borrowers. The home will be subject to a VA appraisal, and an experienced agent will help you avoid homes that won’t meet the minimum required standards.

How does a VA home loan work?

The VA’s guarantee means the government will repay the lender a portion of a VA loan if the borrower doesn't make payments. This assurance reduces the risk for lenders, which makes it possible for them to offer favorable terms and require no down payment.

VA loan rates are typically lower than offers you’d find for conventional loans. The rate could be fixed, meaning payments will remain the same, or adjustable, meaning that payments could change over time. Adjustable-rate mortgages (ARMs) come with some risk, as you’ll pay more if rates rise.

If eligible, you can complete the VA mortgage application process through a lender of your choice. Many (but not all) lenders offer VA loans, and some lenders specialize in serving VA loan borrowers. It’s a good idea to apply with multiple lenders in order to compare rate offers.

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