United States
Hong KongVA loans explained
VA loans require no down payment within the borrower's entitlement and carry no monthly mortgage insurance. A funding fee applies unless the borrower is exempt, and eligibility rests on qualifying service.
A guaranty rather than insurance, available to qualifying service members, veterans and certain surviving spouses.
The Department of Veterans Affairs guarantees a portion of the loan, which is what lets a lender advance the full purchase price.
The two headline features
No down payment within entitlement. No monthly mortgage insurance.
That second one is the real economic advantage and it is frequently overlooked. An FHA borrower pays an annual premium every month; a VA borrower does not. That is the real saving.
The funding fee
A one-off fee charged unless the borrower is exempt. It may be financed into the loan.
Exemptions include veterans receiving compensation for a service-connected disability. Questions frequently describe such a borrower and ask about the fee.
It is a one-time charge, not a recurring premium, and the distinction is the point of several questions. A VA loan has no monthly mortgage insurance at all.
Entitlement
The amount the VA will guarantee on a borrower's behalf. It can be partially used, restored after a loan is repaid, and in some circumstances substituted.
A borrower with partial entitlement remaining may still buy, sometimes with a down payment covering the shortfall.
Occupancy
VA loans are for a primary residence. They are not an investment property program, and occupancy certification is part of the file.
Common questions
Do VA loans require a down payment?
Not within the borrower's entitlement. A down payment may be needed where entitlement is partially used.
Do VA loans have mortgage insurance?
No monthly mortgage insurance. There is a one-off funding fee unless the borrower is exempt.
Who is exempt from the VA funding fee?
Veterans receiving compensation for a service-connected disability, among others.
Can VA loans be used for investment property?
No. They are for a primary residence and occupancy is certified.
Is the VA funding fee the same as mortgage insurance?
No. It is a one-time charge rather than a recurring premium.