What is 'VA Loan'

A VA loan is a mortgage loan available through a program established by the United States Department of Veterans Affairs. VA loans assist service members, veterans, and eligible surviving spouses to become homeowners. The VA sets the qualifying standards, dictates the terms of the mortgages offered and guarantees a portion of the loan. VA home loans are provided by private lenders such as banks and mortgage companies.


The VA offers a home loan guaranty benefit and other housing-related programs to help the qualified buy, build, repair, retain, or adapt a home for personal occupancy. VA loans offer up to 100% financing on the value of a home. To qualify for a VA loan, borrowers must present a certificate of eligibility, which establishes their record of military service, to the lender. VA loans, FHA loans and other loans insured by departments of the United States government are securitized by the Government National Mortgage Association (Ginnie Mae). These securities carry the guarantee against default of the United States government. VA loan recipients do not have to be first-time homebuyers, may reuse the benefits, and may assign the loan to another qualifying person. Terms of VA loans include several benefits. No down payment is mandated unless required by the lender, or if the purchase price is above the established property value. There is no private mortgage insurance premium requirement. Closing costs are limited and may be paid by the seller. The lender may not charge a prepayment penalty. The VA may assist borrowers to avoid default. And, many states offer additional benefits to veterans such as property tax reductions.

VA Loan Types

Purchase loans enable veterans to purchase a home at a competitive interest rate often without requiring a down payment or private mortgage insurance. Cash out refinance loans allow veteran mortgage holders to borrow against home equity to pay off debt, fund school, or make home improvements. Interest Rate Reduction Refinance Loan also called the Streamline Refinance Loan enables borrowers to obtain a lower interest rate by refinancing an existing VA loan. The Native American Direct LoanProgram helps eligible Native American veterans finance the purchase, construction, or improvement of homes on federal trust land, or reduce the interest rate on a VA loan. Adapted Housing Grants help Veterans with a permanent and total service-connected disability purchase or build an adapted home or to modify an existing home to for their disability.