When you decide to use a VA Loan, you may be excited about the prospect…
You may have heard of the VA Loan as a “zero money down” loan. Some people hear this and think that the VA Loan is free money that they can use to purchase a home. While there are many benefits to using the VA Loan, free money is not one of them.
When it comes to a mortgage, there is no such thing as free money. Lenders or sellers may cover some costs, such as closing costs, but if you are borrowing money to purchase a home, you will need to pay it back. You almost always have to pay it back with interest as well.
VA Loan Down Payment
The VA Loan does not require a down payment like a standard conventional loan. When people think of the VA Loan, they often think of the fact that they can purchase a home without a down payment. This is the “zero money down” aspect of the loan. You can apply for and get approved for a mortgage without paying anything out of pocket. This is a huge benefit for those who want to pursue home ownership without saving up for years for a hefty down payment.
You will need to pay the VA Loan back to your lender not the Department of Veterans Affairs in most cases. The Department of Veterans Affairs guarantees the loan but all of the actual lending happens with between you, the borrow, and independent lenders. They will review your credit history, income, debts, and other factors before approving your VA Loan. Once your loan is approved, you will need to pay it back over the amount of time agreed upon in your loan documents. This is often 15 or 30 years. You will also get an interest rate when your loan gets finalized. This details the amount of interest that you will have to pay over the life of the loan.