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A VA mortgage is a loan that is guaranteed by the United States Department of Veterans Affairs (VA). A number of qualified lenders can issue the funds. This government-backed loan is designed to provide long-term financing to American military veterans or their surviving spouses.

The VA loan program has two basic intentions. First, it provides home financing to eligible veterans when private financing is generally unavailable. Second, it helps them purchase a home with no down payment. In some cases, lenders provide financing for a second mortgage or energy efficient home improvements.

Who Is Eligible for a VA Mortgage?

The Department of Veterans Affairs designates certain locations as eligible financing areas. Generally, they are housing credit shortage areas – small towns and rural areas that are located away from major metropolitan cities. However, city dwellers may also qualify.

A VA mortgage qualifies veterans for higher loan amounts than traditional loans from the Federal National Mortgage Association (FNMA), commonly called Fannie Mae. A VA loan allows a monthly mortgage payment up to 41 percent of the borrower’s monthly gross income. A loan that conforms to Fannie Mae guidelines allows a monthly payment up to 28 percent.

Who Finances a VA Mortgage?

Contrary to popular thought, the federal government does not make direct loans under the VA home loan program. It simply guarantees loans that are issued by private mortgage lenders. Veterans must make their own financial arrangements through the normal lending process. The VA appraises the home in question before it guarantees a loan.

Recipients of a VA loan must pay the government a funding fee unless they are exempt. Veterans receive a fee exemption if they receive a disability compensation of at least 10 percent. If the VA awards disability compensation after the funding fee is paid, the veteran can apply for a refund.

Veterans can pay the funding fee in cash or include it in the loan amount. The loan cannot include closing costs such as VA appraisal, credit reports, title fees, transfer taxes, insurance and other charges. However, the seller often pays for these on behalf of the veteran.

How Can Lenders Find Veterans?

When veterans are ready to buy a home, they look for qualified mortgage lenders to issue the financing. Live Transfers® can put lenders into direct contact with these buyers. Their team of marketers target eligible veterans and VA loan holders to provide quality leads. To learn more about VA mortgage leads and how Live Transfers® can help, visit www.lifetransfers.com.