VA Home Loans in General
The VA loan is the government’s attempt to make homeownership accessible for those who have provided military service to our country.
VA home loans can offer significant advantages over other loan types—zero down payment required, no monthly mortgage insurance and some of the most competitive interest rates on the market.
Lenders like VA loans because they are backed by the government, thus reducing the lenders’ financial risk of servicing these loans.
There is an upfront cost to the veteran for obtaining a VA loan, however, called the VA Funding Fee. This fee is oftentimes rolled into the loan to avoid the veteran from needing to provide additional cash upfront. The amount of the funding fee is determined by loan’s purpose, a down payment, and 1st time or subsequent use of a VA loan. Due to this fee, the VA loan may not be the best option for every veteran. If you have a down payment, and/or are planning to refinance any time down the road, perhaps paying a funding fee every time you obtain new financing would not make sense. As previously stated, the goal of the VA loan is to make homeownership accessible, however, there is a cost for this accessibility.
While VA loans can, in certain rate-reduction refinance cases, be used for investment properties, the VA loan program is intended to help veterans have an affordable option for purchasing and maintaining their primary residence.