Veterans Administration (VA) loans: An overview


If you are a veteran, thank you for your service! VA home loans are a terrific benefit that can help you get into your dream home.

What is a VA loan?

VA loans are administered through the United States Department of Veterans Affairs but are not actually loans offered by the VA. Instead, private lenders, such as Capital Bank, N.A., provide the actual loans. The VA’s role is to guarantee a portion of the loan, which in turn allows the lender to provide you with better loan terms. Essentially, a VA loan guaranty provides insurance to the lender on the homeowner’s behalf.

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Benefits available through the VA loan program

Benefits offered through the VA loan program include purchase loans to help you buy a home at a favorable interest rate, cash-out refinance loans which allow for cash withdrawals from your home’s equity to pay for other needs, and Interest Rate Reduction Refinance Loans (also called IRRRLs or streamline refinance loans) to help homeowners refinance an existing VA loan to a lower interest rate or more favorable terms.  You may not receive cash out proceeds from an IRRRL.

Who is eligible for a VA loan?

Veterans aren’t the only ones who can qualify for VA loans. You may also be eligible if you are a current or former National Guard or Reserve member, an active duty servicemember or an eligible surviving spouse.

The specific benefits available will be determined by the VA based on the amount of time you (or your spouse) served or service commitment, your duty status and your character of service.

Check out the VA webpage for specific eligibility requirements.

VA loan advantages for you, the buyer

VA borrowers can enjoy valuable advantages, including:

  • The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location. The loan cannot exceed the limit for government-insured loans in your area. You can find a list of VA loan limits here.
  • There is no monthly Private Mortgage Insurance (“PMI”) premium requirement. You may have to pay a one-time upfront funding fee that is based on the nature of your military service, the loan type, the size of the down payment, and whether you have used the VA loan benefit in the past.
  • VA rules limit the amount you can be charged for closing costs.
  • Closing costs may be paid by the seller.
  • The lender can’t charge you a penalty fee if you pay the loan off early.
  • VA may be able to provide you some assistance if you run into difficulty making payments.

No matter where you are in life, that is a super line-up of advantages. If you’re eligible for a VA loan, it makes sense to explore VA options.

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How do I use the VA loan benefit?

Once you determine that you fit the eligibility requirements, the next step is obtaining a Certificate of Eligibility from the Department of Veterans Affairs. Your lender will need this document to verify you are eligible for VA loan benefits.

Next, you will want to locate a lender that participates in the VA program. Capital Bank N.A. has been a VA lender since 2011 and has closed more than $600 million in VA loans. With in-house underwriters, loan processors and closers, as well as an online pre-approval process.  Capital Bank offers VA loan-eligible individuals the following advantages:

  • A direct point of contact throughout the entire process
  • No origination fees, no processing fees, no underwriting fees, no tax service fee, no Bank fee.
  • Dedicated VA loan specialists on staff

VA loan eligibility

If you are considering what your VA loan benefits are, the first step is to dig into the program’s eligibility requirements.  The home must be for your own personal occupancy.  Those eligible for VA home loans can use the loan to:

  • Buy a home, a condominium unit in a VA approved project
  • Build a home
  • Simultaneously purchase and improve a home
  • Improve a home by installing energy-related features or making energy efficient improvements
  • Buy a manufactured home and/or lot
  • To refinance an existing VA-guaranteed or direct loan for the purpose of a lower interest rate
  • To refinance an existing mortgage loan or other indebtedness secured by a lien of record on a residence owned and occupied by the veteran as a home

Spouses of servicemembers may also apply for VA loan benefits, subject to certain restrictions.

Once you are on track for eligibility, you will be on your way to getting into your new home–a well-deserved path for you and your family.

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