The VA loan program (through the Department of Veterans’ Affairs) is open to active duty members of the armed services and Veterans who meet minimum service requirements. Surviving Spouses, members of the National Guard and Reservists may also qualify.

Origin of the VA: In 1944, as World War II was nearing an end, Congress passed the G.I. Bill, extending an array of benefits to returning servicemen and women. At the heart of this law was a loan guarantee program. Through it, the Department of Veteran’s Affairs (VA) insures home loans to qualifying Veterans. As of this writing, the VA has insured 18 million loans.

Upon request, the VA issues a Certificate of Eligibility with an “Entitlement” amount. This entitlement is used to insure the loan. The entitlement generally only guaranties one loan at a time, but can be reinstated and used for multiple home purchases. At closing, the Veteran must pay a Funding Fee, the cost of which is usually financed. The fee varies depending on the down payment amount, whether it is the Veteran’s initial or a subsequent use and the type of service (regular military versus Guard/Reserves). Funding fees are generally waived for Veterans with service-related disability.

For home purchases up to $417k, most VA loans do not require a down payment. The VA allows the seller to contribute toward closing costs. As a result, VA loans can close with little-to-no cash from the buyer.