The VA Loan Program was designed to make it easy and affordable for veterans to own their own home.
The Veteran's Administration does not lend money directly to prospective borrowers. In order to get a VA Loan, borrowers have to apply to a lender, such as a bank or a savings and loan, or work with a mortgage company, like Freedomstar Financial, to secure the best rate and terms.
The biggest difference between a VA Mortgage and a Conventional Mortgage is that VA Loans are backed by the Federal Government. This federal guarantee provides downside protection to the lender and usually covers about 25% of the loan amount. That means that the lending institution can offer VA Loans at competitive rates with no down payment to borrowers that do not have great credit. Unlike conventional loans, VA Loans carry less risk to the institution.
The guaranteed portion of the loan is called the entitlement. Every veteran and/or active duty service member is given an entitlement for service. A veteran can borrow up to $417,000 with no down payment.
The advantages of a VA Guaranteed Loan:
The disadvantages:
If you have questions about how a VA loan works, contact the professionals at Freedomstar Financial at 888-659-0033.
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