As a veteran of the U.S. Air Force. I think one of the best things that has happened in the last 65 years since World War II has been the evolutionary mindset of the American policy makers towards military veterans. In 1944 the Serviceman's Readjustment Act the Veteran's Administration (VA) was authorized to guarantee (insure) home, farm, and business loans for it's American military veterans. Contrast this with the Bonus Army protests of 1932 and it is obvious the strides we have made. The Serviceman's Readjustment Act has gone through some revisions over the years to make it more inclusive, but overall it allows qualified military veterans to get a home loan with no money down.
The VA neither builds homes nor lends money. The VA guarantees loans as a benefit to the veteran on owner occupied one-to-four family dwellings, mobile homes and lots. Loans are guaranteed when the borrower pays a funding fee. The following are important concerning VA loans:
- Certificate of Eligibility - The veteran must get a certificate from the Veterans Administration indicating that he/she is eligible for the loan.
- Maximum Loan - The veteran can get a 100% loan on up to $417,000 in South Carolina for a single family home. Click here for more information on loan limits per state and area.
- Appraisal - An approved licensed VA appraiser must appraise the property. In addition the VA appraiser will also inspect the property to insure it meets minimum standards, much like a FHA loan.
- Use - there is an unlimited amount of times that this benefit may be used by a qualified veteran, but it can only be used one at a time. This means if a veteran uses the benefit to purchase a home, then over time decides to rent the house, the veteran can't utilize the VA home loan again until the house is sold. The only exception to this is under the rule of assumption (see below).
- Assumption- Non-veterans can assume VA loans, but the veteran's eligibility will be tied up in that home until the home is paid off. If a veteran can find another veteran to assume his/her loan and the veteran-purchaser will substitute his/her eligibility for the original veteran's entitlement, then the original veteran can have his/her eligibility reinstated.
- Prepayment Penalties - prepayment penalties are illegal on VA loans.
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