A VA loan is a mortgage loan in the United States guaranteed by the Veterans Administration. The loan may be issued by qualified lenders.
The VA loan was designed to offer long-term financing to American veterans or their surviving spouses (provided they do not remarry).
The VA loan allows veterans 100% financing without private mortgage insurance or 20% second mortgage. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA and is allowed to be financed. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. In a refinance, veterans may borrow up to 90% of reasonable value, where allowed by state laws.
As of January 1st, 2006, the maximum VA loan amount with no down payment is $417,000 and can be as high as $625,500 in certain high-cost areas. VA also allows the seller to pay all of the veteran’s closing cost as long as the cost does not exceed 6% of the sales price of the home.