VA Loan
Definition
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
Example
A veteran with 20 years of service purchases a $400,000 home using a VA loan with zero down payment and no PMI. The VA funding fee of 2.15% ($8,600) is financed into the loan. The veteran's monthly payment includes only principal, interest, taxes, and insurance—no mortgage insurance premium.
Exam Tip
Key VA exam facts: NO down payment required, NO monthly mortgage insurance, funding fee required (but disabled vets may be exempt), the VA guarantees but does NOT lend, and only eligible veterans/active military/surviving spouses qualify. A Certificate of Eligibility (COE) is required.
Related Financing Terms
Deed (in foreclosure context)
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Trustee Sale
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Foreclosure
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
Conventional Loan
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
FHA Loan
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
Fixed-Rate Mortgage
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Frequently Asked Questions
Test Your Financing Knowledge
Practice with exam-style questions to make sure you can apply VA Loan and other financing concepts.