Military family outside house

Military Home Loans: How to Get One and What Are the Benefits?

The VA loan helps active-duty military and veterans turn their homeownership dreams into reality. Yet many of these people don’t understand what this loan program entails, or even if they qualify. Continue reading for a closer look at these military home loans.

What is a VA loan?

The U.S. government created the VA loan in 1944 to assist returning service members in their homebuying efforts. Those who came up with the idea wanted these heroes to achieve the American dream without needing excellent credit or a down payment. Millions of veterans and service members are now reaping the benefits of homeownership thanks to the VA loan.

So how popular is this loan program? Well, according to the U.S. Census, 8% of home purchases were made with a VA loan in the first quarter of 2019. Its impact is even greater at the moment, considering how lenders tightened their guidelines during the pandemic. 

Who qualifies for this loan program?

The good thing is that the VA qualifications are straightforward. You might be eligible if you or your spouse served 181 days during peacetime. You can also move forward with a VA loan application if either of you did at least 90 days during wartime.

The military loan program extends to some members of the Reserves and National Guard as well. You must spend at least six years in either organization before you can gain eligibility for a VA home loan. Something else worth noting is that VA mortgages are available to qualified surviving spouses.

Whether you’re using your VA benefits for the first time or fifth time, you have to live in the place you’re buying. A lender will not let you finance an investment property with a VA loan. Be sure to explore other options if you’re interested in purchasing a second home and then renting it out or making it your vacation home.

As we’ll discuss later in the article, you can have less than perfect credit and still obtain a VA loan. That said, borrowers must meet certain underwriting criteria. Lenders suggest getting your financial ducks in a row as soon as possible so that you’re ready to proceed when you find the perfect home.

What are the loan requirements for 2021?

In the past, VA borrowers could not exceed a cap when using the loan program. The limit often forced service members out of higher-priced areas and, in many cases, their most desired locations. But with no value limit in place anymore as of 2020, VA borrowers should have greater flexibility in their homebuying endeavors.

The VA program remains in place in large part thanks to the funding fee. This one-time fee depends on your loan type and value, your down payment, and other factors. Per Bankrate, the funding fee can be 3% or more for some home purchases and 0.5% on many refinances.

Why does the VA employ a fee? In short, what you pay for your funding fee goes directly to the VA and protects them if you ever default on your loan. All borrowers who choose this loan program are required to pay their funding fee at closing. 

What are the benefits of a VA loan?

No down payment

We can’t emphasize enough the significance of not having to come up with a sizable down payment. Think of what other financial goals you could achieve once you’re approved for a zero-down home loan. While some folks might choose to pay down high-interest debt, others might save extra money for home improvements or an emergency fund.


We have an entire article dedicated to private mortgage insurance, or PMI. Private mortgage insurance is similar to the VA funding fee in that it serves as protection for the lender. No PMI means potentially hundreds of dollars in monthly savings depending on your loan amount.

Relaxed credit requirements

Are you worried that your credit score will prevent you from buying a home? Then you’ll be happy to know there’s no minimum credit score requirement for a VA loan. However, improving your score before you apply can result in a lower interest rate.

Assistance available

You never want to envision yourself in a situation where you can’t keep up with your mortgage payments. But if you’re ever struggling to this extent, contact the VA. They can talk to your lender about alternatives to foreclosure so you can remain in your home.

Ability to refinance

Rates are incredibly low in 2021. But what happens if rates drop and you’d like to refinance? There are refinancing options available with VA loans so that you’re able to snag a lower rate and lower your payment.

Talk to a dedicated real estate agent

At American Home Agents, we help military families land their dream home every day. Give us a call at (303) 695-5900 and talk to one of our award-winning agents.

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