Question:

What is a Veteran Administration (VA) loan?

Answer:

The Veteran Administration (VA) loan is a government-backed loan, which provides home loan benefits to eligible veterans or active duty personnel. Veteran Affairs (VA) loans are guaranteed by the US government and issued by VA approved lenders.

The Veteran Administration (VA) mortgage loans are designed to help American veterans achieve homeownership at affordable terms, especially in areas where mortgage credit is particularly difficult to obtain - such as rural areas and small towns.

A special feature of Veteran Administration (VA) home loans is that private mortgage insurance (PMI) is not required; a VA funding fee varying from 0 to 3.3% is demanded instead.

The VA mortgage loan limit is set at $417,000 but VA loans in excess of the limit are also possible under specific terms.

VA allows the seller to fund up to 4% of the loan amount towards the closing costs of the mortgage.

The Servicemen's Readjustment Act, passed by the Congress in 1944, authorized the Veteran Administration to guarantee/insure home and business loans, made to veterans by different lenders. The subsequent amendments in 1970 and 1978 enlarged the range of VA benefits, including VA loans on mobile homes and farms.

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