If you mean “Is a VA loan effective in helping veterans buy a home?” To that, the answer is an unequivocal, full-throated YES. If you are asking whether a loan without a requirement for a down payment and with no mortgage insurance is an acceptable risk for a lender, the answer is also YES.
For any readers who may not be aware, the Department of Veterans Affairs guarantees mortgages from a VA loan. Qualifying veterans (that would be primarily anyone who served under honorable conditions in the U.S. military with at least 181 days of active duty or 91 days during wartime) can purchase a home with a loan for the full amount of the property’s appraised value, up to the county maximum loan amount. That will be at least $424,100 nationwide, but much higher in more expensive housing markets. A quick call to a reputable, VA approved lender can help you with questions in your area.
The Advantages of a VA Loan
Using the VA loan guarantee, a veteran applies for a loan through any lender offering VA loans (most do). Lenders use slightly different criteria to qualify veteran borrowers, so they may be able to be eligible for a higher loan amount than a conventional borrower.
The reason lenders are willing to make loans to borrowers who have no “skin in the game” (i.e. no down payment) is that VA guarantees these loans. This means that if the borrower went into default and the lender had to foreclose; the lender would be protected from loss to a high degree.
Oh, and there’s the fact that the veteran DID put considerable “skin in the game” when they signed up to serve in the first place. And we thank them for that.
So, to answer your question, “Are VA loans or mortgages effective,” I’d have to say, yeah, I think so.
As always, reach out to a trustworthy lender for loan guidelines or to apply for a VA loan.
For more information about a VA Loan please visit the U.S. Department of Veteran Affairs.