Over the history of the program, over 18 million VA loans have been issued but the average American might not know much about the program.
Here to catch us up is Greg McBride, Senior Financial Analyst at Bankrate.com. Greg, first of all, how is a VA loan different from a run-of-the-mill home loan?
Greg: While the loan is made through a private lender, it is guaranteed by the Veterans Administration. What sets these apart is that VA loans can be obtained without any down payment, and they do not require mortgage insurance for downpayments of less than 20 percent, like conventional and FHA loans. There is a one-time funding fee that varies based on the downpayment and type of veteran, but all in all, VA loans can offer significant savings, both up front and each month thereafter.
Now, I assume all veterans qualify for the program ... is there anyone else who can get in on the action?
Greg: Most members of the military, veterans, Reservists and National Guard members are eligible, as are spouses of military members killed in action. Active duty members are eligible to apply after about 6 months of service. Potential borrowers must obtain a certificate of eligibility before applying for a loan.
And finally, can you use a VA loan to refi your home?
Greg: Yes, eligible borrowers can use a VA loan to refinance their primary home. You cannot use a VA loan for vacation or investment properties. You can refinance up to 100 percent of the home’s value without paying mortgage insurance. Borrowers that have sufficient equity and an existing VA loan can also do a cash-out refinance through the VA loan program.
That's some great information, Greg. Thank you.
And if you'd like to find out more, make sure to check out the rest of our special feature on VA loans right here on Bankrate.com.