The Business Behind VA Loans

The United States Department of Veterans Affairs offers home loans to honorably discharged veterans or active duty members of the U.S. military. Thanks to this opportunity, they can get affordable mortgages for purchasing a new house. There is also a possibility of refinancing these loans in the future, if necessary. Surviving spouses of the veterans can also apply for VA credit.

It is crucial to know that the Department of Veterans Affairs doesn’t issue these loans. It only guarantees or insures the funds. If you want to apply for this mortgage program, you need to visit a VA approved lender.

Requirements for obtaining a VA loan

If you want to get approval for this mortgage program, the first thing you need is a certificate of eligibility. It is a proof of your current, or past military service. In most cases, lenders can acquire this document. However, sometimes an applicant has to fill out a form online or by mail to receive a certificate of eligibility.

The second condition for enjoying VA benefits is to have a reasonably good credit record. It doesn’t have to be excellent, but you should have a score of at least 620. The purpose of this is to make sure that you are capable of repaying the loan, and have a record of covering your debts on time.


Additionally, you have to provide income documentation, so that you can assure the lender you can pay back the loan. It includes the form of W-2s from your place of employment if you have a job, and past two years of tax forms if you are self-employed. If you have a military pension or other sources of income, you need to prepare receipts before visiting a VA mortgage lender in Illinois.

The fourth requirement is paying a one-time funding fee. If you have no down payment, this fee is 2.15%. It goes down to 1.25% with a down payment of 10%. These charges vary depending on how often you use entitlement to benefit, and on the type of military service.

Finally, the home appraisal is necessary to determine the market value of the property you want to purchase. Minimal house requirements include residential, not a commercial property, adequate living quarters, water and electrical systems in good working condition, etc. If the appraised value is lower than the selling price, you might have to re-negotiate the sale.

Advantages of VA mortgage program

One of the benefits for veterans is that you are not required to spend money on a down payment, as it is not necessary. You can enter your house without paying a cent. Additionally, it offers 100% financing, and there is no mortgage insurance. Thanks to this, your monthly loan expenses will be small. Also, you will be eligible for larger credit amounts, in comparison to conventional loans.


The next advantage is that you don’t need an excellent credit score. It just needs to be reasonable. A VA loan is offered on the repayment capacity of the borrower, not on the credit rating. Finally, it is not limited to buying a house for the first time. You can use VA credits for purchasing a second home.

Tyler Crawford

Tyler Crawford

I'm a happy person with mediocre dance moves. Based in San Diego, United States
Tyler Crawford

Latest posts by Tyler Crawford (see all)

Leave a Reply

Your email address will not be published. Required fields are marked *