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VA Loans Explained


Taking the first steps toward buying your dream home can be exciting – and overwhelming. There are all kinds of different loan options available when you’re shopping around for mortgages, and a conventional loan isn’t always going to be the best fit. However, a VA (Veterans Affairs) loan could be a good option if you qualify.

It’s important that before starting the process of applying for a VA loan, you understand what they are and how they work. The first step in qualifying for a VA loan from a mortgage lender? Getting certified online. Start the process today by applying for a VA loan with Arkansas Federal Credit Union or by talking to one of our home loan experts about your options.

What Is a VA Mortgage Loan?

A VA, or Veterans Affairs, mortgage loan is a type of mortgage-backed by the Department of Veterans Affairs. VA loans are intended to help service members, veterans, and their families buy homes. Lenders face less risk under a VA loan, as the government backing guarantees that they’ll be able to recover some (or all) of their losses if the loan defaults. Because of this, lenders are more likely to give the borrowers a loan under more favorable terms.

VA mortgages are only available to veterans or active duty service members who meet the VA requirements.

VA Loan Requirements and Eligibility

You need a Certificate of Eligibility (COE) in order to qualify for a VA loan. Registering for a COE is free, easy, and something you can do online in just a few minutes.

What you need to qualify for a COE may differ based on your state and active duty status. For example, veterans typically need to provide their discharge papers, while active duty service members will need to provide their statement of service.

If you’ve already bought and sold a home through a VA loan, you likely won’t have to go through the eligibility process again. Your VA mortgage loan eligibility can generally be restored online.

For individuals eligible for VA loans with conventional mortgages, the Veterans Improvement Act of 2008 allows you to refinance a non-VA loan into a VA loan. You may be eligible to refinance for up to 100% of the property’s value.

Pros of VA Loans

VA loans are intended to make purchasing a home more accessible and affordable for qualifying veterans. If you are eligible, getting a VA loan can offer many benefits.

Down Payment

Because the Department of Veterans Affairs secures VA loans, you can purchase a home through a VA loan with no down payment as long as the house’s sale price doesn’t exceed its appraised value.

No Private Mortgage Insurance

VA loans are secured loans, which means that your mortgage lender doesn’t put themselves at risk by granting you the loan. Even without a down payment, you won’t have to pay for Private Mortgage Insurance when using a VA loan.

Home Type

You can get a VA mortgage loan for traditional and manufactured homes. The loan amount may vary depending on the type of home, but you will still be eligible for a loan.

VA Loan Rates

VA home loan rates are typically lower than conventional mortgage rates because the Department of Veterans Affairs secures the mortgage.


With a VA loan, there is no prepayment penalty. You can pay more towards your mortgage to pay it off faster with no penalty.

VA Assistance

The Department of Veterans Affairs may be able to offer assistance if you run into temporary financial difficulties related to your mortgage or homeownership.

Cons of VA Loans

When getting any type of mortgage, there can be risks involved. It’s important to consider the potential setbacks a VA loan could present to your particular situation before committing to one.

VA Funding Fees

You are charged VA funding fees when you close on a home with a VA loan. This fee can range anywhere from 1-3% of your loan amount. This is a one-time fee but can be costly, so it’s important to consider it when looking into VA loans.

Property Restrictions

For a VA mortgage loan, the property must be your primary residence. You can’t use this type of loan to purchase an investment or rental property. 

Less Equity

When using a VA loan, you may start your homeownership with little to no equity, as VA loans don’t require a down payment to purchase your home. Without a down payment, you may not have equity in your home immediately.

Apply for a VA Loan Today

VA loans can be a reliable loan option for people who are eligible for them. The security and affordability a VA loan can offer often make purchasing a home more attainable for service members, veterans, and their families. 
When you apply for a VA loan with a lender, you could be eligible to purchase a home with no down payment and obtain a mortgage with a better interest rate. Ready to get started? You can get a VA mortgage quote quickly and easily online today – apply for a VA loan at Arkansas Federal, and we’ll help you get started on your journey to your dream home.

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Call us at 800.456.3000 or visit your local branch.