More than 1 million VA loans were guaranteed by the Department of Veteran Affairs in 2020. Since the program started in 1944, the VA backed more than 25 million loans.
What is a VA loan? It’s a loan that’s distributed by private lenders but financially guaranteed by the Department of Veteran Affairs.
VA loans are a way to help service members and their families realize the dream of homeownership. If you qualify for a VA home loan, you’ll need to know the different types of VA loans.
You’ll be able to get into the home of your dreams with the right financial help. Keep reading to discover the types of VA loans to choose from.
1. VA Purchase Loan
This is a standard VA loan to purchase a single-family home. Many veterans use these loans to purchase their first home.
That’s because VA loans don’t require a down payment. Even with an FHA loan, you have to put down at least 5%.
2. VA Multi-Family Loan
Did you know that you can get a VA loan and use it to purchase an investment property? That allows you to leverage the loan to create additional income.
The loan functions like a purchase loan, but there are additional guidelines. You have to have some kind of property management experience.
The property also has to meet certain standards and requirements. This article has more details about qualifying for the loan.
3. VA Refinance Loan
You can take out a cash-out refinance if you’ve built up equity in the home. The other option is to take out an interest rate reduction refinance loan.
Both types of VA loans are useful if you want to cash out equity or lower your interest rate.
4. VA Renovation Loan
The VA has very strict quality standards to get approved for a purchase loan. If the home doesn’t meet those standards, you can apply for a VA renovation loan.
Use the loan to make improvements so you meet those standards. You’ll then be able to purchase the home.
5. VA ARM Home Loan
A VA ARM is an adjustable-rate mortgage. This type of mortgage changes the interest rate at certain periods, whether monthly, annually or quarterly.
The downside of the VA ARM loan is that it can make your payments go up when interest rates do. If you buy a home when interest rates are high, a lower rate will lower your monthly payment.
With interest rates at record lows, you should consider a fixed-rate VA loan. That locks your loan down at the same interest rate for the life of the loan.
Learn About the Different Types of VA Loans
You have no shortage of loan options when you apply for a VA loan. You can get a loan at a fixed interest rate or adjustable rate.
There are certain types of VA loans that cover refinancing and renovations. You can use them for a home purchase or for a multi-family home.
Whatever your needs are, there’s a VA loan for you. Do you want more tips to improve your finances? Check out the blog for more helpful articles.