VA Loans — A Quick Primer

What makes VA loans different? First of all, the VA does not actually lend money.  Rather, it guarantees loans made by other banks.  These types of loans are only available to veterans, currently active military, National Guard members, and the spouses of people in the military who died or were disabled on duty.  If you qualify for a VA loan, you do not have to make any downpayment at all, so long as you are purchasing a primary residence.  Moreover, you can use a VA loan not only as a first-time homebuyer, but for subsequent purchases as well.

On the flip side, the VA charges an upfront fee of 1.25% – 3.3% of the loan amount. The upfront fee is usually included in the loan amount, although the seller may agree to pay it on behalf of the buyer as well.  Also, the VA limits how much it will lend on a transaction based on the county the property is located in. You would need to contact the VA to find out what their limits are in your county.