A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans have considerable advantages over FHA and conventional loans in that VA loans allow for 100% financing with no mortgage insurance.

The VA loan signed into law by President Franklin D. Roosevelt in 1944 through the Servicemen’s Readjustment Act also known by its more commonly known name of the GI Bill of Rights.  vaThe purpose of the VA loan was to provide US Veterans with the opportunity to purchase a home with no many down via a federally guaranteed home loan. VA loans are made by private lenders such as banks, savings & loans and mortgage companies to eligible veterans for the purchase of a home.  The home must be used as their personal residence.  Since VA loans are guaranteed by the government the lender is protected against losses that they might otherwise incur as a result of non-payment or default.  The guaranty of up to 25% of the loan amount, up to a max of $104,250 replaces the security a lender would otherwise have through a conventional loan requiring 20% down.  This security allows the lender to provide VA eligible veterans with more favorable loan terms.