What is a VA loan?

Instead of lending money directly, the VA guarantees a portion of the loan. This guarantee reduces the lender's risk, making it easier to qualify and often leading to better interest rates than conventional loans. If eligible, a VA home loan allows you to purchase a home with no down payment, no private mortgage insurance, and access to competitive VA loan rates.

This powerful program provides one of the most valuable benefits of military service, helping thousands of military families achieve the dream of homeownership each year.

Who is Eligible for a VA Loan?

To qualify for a VA loan, you must meet certain service requirements. You may be eligible if one of the following scenarios describes your situation:

Active-Duty Service Members

• Currently serving with at least 90 continuous days of active duty

Veterans

Who meet one of the following service conditions:

• 90 days during wartime, OR
• 181 days during peacetime, OR
• 24 continuous months (if service began after Sept. 7, 1980, for enlisted, or Oct. 16, 1981, for officers), OR
• Completion of the full period for which you were called or ordered to active duty (with certain exceptions).

Received honorable or general discharge (you must have been discharged under conditions other than dishonorable).

National Guard and Reserve Members

Who meet one of the following service conditions:

• 6 years of honorable service in an active or drilling status, OR
• Activated under Title 10 for at least 90 days, OR
• Served 90 cumulative days under Title 32, with at least 30 consecutive days included.

Surviving Spouses

Surviving spouses can also qualify for VA loans as long as they are currently unmarried spouses of service members who died in the line of duty or from a service-connected disability. If they remarried after age 57 and on or after December 16, 2003, the spouse may also qualify for a VA loan.

Some surviving spouses of those who are known prisoners of war (POW) or missing in action (MIA) may also qualify.

What is a Certificate of Eligibility?

In addition to these service requirements, you need a Certificate of Eligibility (COE) to apply for a VA loan. The COE proves to lenders that you meet the necessary criteria. Most VA-approved lenders can assist in obtaining your COE, helping streamline the process for you. You can also log into your VA.gov account and request the document yourself.

VA Loan Types

VA loans come in several types, each designed to meet different stages of homeownership, from buying your first home to refinancing or tapping into your equity.

Here are the types of VA loans:

1. VA Purchase Loan: This type helps eligible buyers purchase a home with no down payment and favorable terms.
2. VA Interest Rate Reduction Refinance Loan (IRRRL): Also known as a streamline refinance, this helps reduce your monthly payments with less paperwork.
3. VA Cash-Out Refinance: A VA cash-out refinance allows you to take equity out of your home to pay for things like home improvements, education, or debt.
4. VA Native American Direct Loan (NADL): This type helps eligible Native American Veterans finance the purchase, construction, or improvement of homes on Federal Trust Land.
5. VA Renovation (Rehab) Loan: A VA rehab loan finances both the purchase and repairs or renovations of a home.

VA Loan Pros & Cons

Like any mortgage option, a VA loan has advantages and limitations. Understanding the pros and cons can help you decide if this benefit aligns with your financial goals and homeownership plans.

How to Apply for a VA Loan

Review our quick breakdown of the steps involved in applying for a VA loan, with helpful advice to guide you:

1. Check your service eligibility: Make sure your service meets the minimum requirements, and gather your service records early to verify eligibility before applying.
2. Find a VA-approved lender: Not all lenders offer VA loans, so double-check and look for lenders with strong VA loan experience and positive reviews.
   Neighbors Bank is a VA-approved lender with a 4.7/5 star rating. Get started with us today!
3. Get your Certificate of Eligibility: Request it through the VA or have your lender help, as many lenders can handle the COE request to avoid delays.
4. Get pre-approved: Know how much home you can afford before you shop. Getting pre-approved strengthens your offer and speeds up the loan process.
5. Shop for a home: Choose a property that meets VA appraisal and condition standards, working with a real estate agent familiar with VA requirements to avoid surprises.
6. Complete the loan process: The lender will guide you through underwriting and appraisal, so stay organized and respond promptly to lender requests to keep things moving.
7. Close on your home: Sign your paperwork and get the keys, making sure to review all documents carefully and ask questions before signing to ensure clarity.

Remember, each VA home loan journey is unique, and the right support can make all the difference. Taking advantage of your VA benefits not only opens doors to affordable homeownership but also provides protections and advantages you won't find with conventional loans.

Written by:

Nathan Smith

Production Manager & Content Author

NMLS #1113712

Nathan Smith joined Neighbors Bank in November 2020, bringing his dedication to service and leadership to the team. He began as the Director of Client Relations, where he successfully built the Client Advocate department from the ground up. Now, as a Production Manager, Nathan focuses on fostering growth and improvement by monitoring individual and team performance.

Reviewed by:

Emily Kittle

Underwriter & Expert Reviewer

Emily Kittle brings over a decade of experience in the mortgage industry, having worked in nearly every part of the residential lending process. Since starting her career in 2010, she has held roles in processing, funding, quality control, underwriting, training, and risk advisory. Before joining Neighbors Bank, she was a Risk Advisor Team Lead at another mortgage company, where she developed a deep expertise in risk assessment and loan decision-making.