VA LOANS

A VA-backed purchase loan often offers:

• No down payment as long as the sales price isn’t higher than the home’s appraised value (the value set for the home after an expert reviews the property)
• Better terms and interest rates than other loans from private banks, mortgage companies, or credit unions (also called lenders)
• The ability to borrow up to the FannieMae/FreddieMac conforming loan limit on a no-down-payment loan in most areas—and more in some high-cost counties. You can borrow more than this amount if you want to make a down payment. 
  See current effective loan limits.
• No need for private mortgage insurance (PMI) or mortgage insurance premiums (MIP)
  • PMI is a type of insurance that protects the lender if you end up not being able to pay your mortgage. It’s usually required on conventional loans if you make a down payment of less than 20% of the total mortgage amount.
  • MIP is what the Federal Housing Administration (FHA) requires you to pay to self-insure an FHA loan against future loss.
• Fewer closing costs, which may be paid by the seller
• No penalty fee if you pay the loan off early

If you qualify for a VA-backed purchase loan, you can use the loan to:

• Buy a single-family home, up to 4 units
• Buy a condo in a VA-approved project
• Buy a home and improve it
• Buy a manufactured home or lot
• Build a new home
• Make changes or add new features (like solar power) to make your home more energy efficient

You can also:

• Get a VA-backed home loan to buy your first home
• Use your VA loan benefit again if you sell or refinance a home you bought with a VA-backed home loan
• Assume a VA-backed home loan (which means that instead of opening a new mortgage loan, the buyer takes over the seller’s loan)

Why might I want to get an IRRRL?

Often called a “streamline” refinance, an IRRRL may help you to:

• Lower your monthly mortgage payment by getting you a lower interest rate, or
• Make your monthly payments more stable by moving from a loan with an adjustable or variable interest rate (an interest rate that changes over time) to one that’s fixed (the same interest rate over the life of the loan)

On a no-down-payment loan, you can borrow up to the FannieMae/FreddieMac conforming loan limit in most areas—and more in some high-cost counties. You can borrow more than this amount if you want to make a down payment. 
See current effective loan limits.

You’ll want to keep closing costs in mind when refinancing a loan, as they can add up to thousands of dollars. Before you decide to refinance, divide your closing costs by how much you expect to save every month by refinancing to see if it’s worth it. While your lender can advise you on the costs and benefits of the transaction, you’ll want to be sure you understand what you’re getting into. 

A VA-backed cash-out refinance loan may help you to:

• Take cash out of your home equity to pay off debt, pay for school, make home improvements, or take care of other needs, or
• Refinance a non-VA loan into a VA-backed loan

On a no-down-payment loan, you can borrow up to the FannieMae/FreddieMac conforming loan limit in most areas—and more in some high-cost counties. You can borrow more than this amount if you want to make a down payment. 
See current effective loan limits.

You’ll want to keep closing costs in mind when refinancing a loan, as they can add up to thousands of dollars. Make sure you understand how your new loan amount relates to the value of your home. While your lender can advise you on the costs and benefits of the transaction, you’ll want to be sure you understand what you’re getting into.

The Consumer Financial Protection Bureau’s home loan toolkit can help. 
Download the home loan toolkit.