Is a VA Loan Right For Me?


In addition to serving your country, there are many benefits that come with being a veteran of the United States Military. One of the most notable benefits is the ability to access loans from the Department of Veterans Affairs (VA) that are not available to most members of the civilian public.

Applying for a VA loan can help you secure a home you might have otherwise not been able to qualify from or afford. Currently, there are about 19 million veterans in the United States, and the majority of these veterans can qualify for a VA loan.

Of course, if this is your first time hearing about a VA loan, you probably have a lot of questions. In this brief guide, we will discuss the most important things to know about VA loans, empowering you to decide whether a VA loan is right for you.


What is a VA Loan?

According to the Department of Veterans Affairs, “We offer VA home loan programs to help you buy, build, or improve a home or refinance your current home loan—including a VA direct loan and 3 VA-backed loans.”

Essentially, a VA loan is a home loan that can be obtained directly from the Department of Veterans Affairs, whereas a “VA-backed” loan is one that is obtained from a private lender but is at least partially guaranteed by the VA. Both options give veterans an opportunity to expand their housing choices and find ways to make buying a home more affordable.

Types of VA Loans

  With a VA Direct Home Loan, the VA functions as your mortgage lender. The application, approval, payments, and all of other components of the mortgage process are handled entirely by the VA.

With a VA-backed loan, the VA can “guarantee (or stand behind) a portion of the loan you get from a private lender. If your VA-backed home loan goes into foreclosure, the guaranty allows the lender to recover some or all of their loses. Since there’s less risk for the lender, they’re more likely to give you the loan under better terms.”

Furthermore, the VA specifies that its loans can be placed into four distinct categories:


Purchase Loans

Purchase Loans: with a purchase loan, you can purchase a home with better terms than would otherwise be possible—in fact, 90 percent of VA-backed loans do not require a down payment.


Native American Direct Loans (NADL)

Native American Direct Loans (NADL): if you or your spouse are Native American, you can apply for a NADL loan that allows you to “buy, build, or improve a home on federal trust land.”


Interest Rate Reduction Refinance Loan (IRRRL)

Interest Rate Reduction Refinance Loan (IRRRL): with a refinanced mortgage, you can secure a lower interest rate and lower your monthly payments.


Cash-Out Refinance Loan

Cash-Out Refinance Loan: with a cash-out refinance, you can convert the equity you’ve already built in your home directly into cash. This cash can then be used for whatever you want, including paying off other debts, paying for college, or any other relevant expenses.

The goal of the VA lending program is to ensure veterans are rewarded for their service to their country—the variety of different loans available helps give these veterans additional financial flexibility.

Drawbacks of Applying for a VA Loan

Really, there are very few drawbacks that come with obtaining a VA loan. However, there is at least one reason veterans might need to apply (at least in part) for a mortgage elsewhere: VA-backed loans have limits.

As of 2021, the limit for a standard VA loan is $548,250 for homes in most parts of the United States. If you live in a more expensive area, the limit will be $822,375 (be sure to check to see what your market is classified as.) As a veteran, if you want to purchase a home beyond these limits, you will need to obtain financing via a private lender.


Bottom Line: Is Applying for a VA Loan Right for Me?

Generally speaking, if you are a veteran that qualifies for a VA loan and the home you are hoping to purchase is under the VA’s limit, you should probably apply for a VA loan. However, as is the case with all components of buying a house, it is still a good idea to do some research and compare your available options.


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