VA Loan Basics for Realtors

Man in military uniform smiles as he holds his young son up after learning about VA loans for military.

The VA loan is an excellent option for active-duty and retired military veterans who are hoping to get into the home of their dreams easily, and with little to no money down.

There are many ways governments, banks and communities can help the more than 1.3 million active-duty personnel in our United States military and about 19 million veterans achieve their home ownership goals. That’s why it's important for Realtors and finance professionals to support veterans and help ensure any military personnel are made fully aware of all the options available to them. One particular option—the VA Loan—is available to all vets, even if they aren't on active duty, and may be their best choice depending on their circumstances.

What Are VA Loans?

VA loans are a type of mortgage that is backed by the United States Department of Veteran Affairs. They are available for veterans and active-duty military members—as well as their spouses—who can prove that they’ve had either 90 days of continuous service during wartime or at least 181 continuous days during peacetime, as well as those who have been with the Reserves or National Guard for at least six years of service. Surviving spouses of former active-duty service members and veterans are also eligible.

Advantages of VA Loans

A VA loan is unlike a traditional mortgage loan for a number of reasons. Although they come in 15- or 30-year options—like a traditional loan would—additional perks of the VA loan include:

  • Options for no down payment or 100% Loan-to-Value
  • No mortgage insurance
  • No prepayment penalties
  • Low closing costs on IRRRLs (Interest Rate Reduction Refinance Loan)
  • Competitive interest rates
  • Flexible terms

Although there is a VA funding fee to apply, the fee can usually be financed into the overall loan amount, so there is an option for a 100% financing, zero down payment product. VA loans are also available as a solid option for an interest rate reduction refinance loan, or IRRRL, which is a form of refinancing available to existing VA-backed home loans. These can be done without the need for an appraisal or a credit report, which makes the entire process faster, more streamlined and less costly than traditional refinancing products.

Other Details About VA Loans

The Certificate of Eligibility helps identify who is eligible for a VA loan and whether they might be exempt from the funding fee. While the VA loan doesn’t traditionally require a minimum FICO score for eligibility, some financial institutions do have minimum FICO score requirements in light of the current COVID-19 pandemic.

Fortunately, Fifth Third Bank has a long history of working with veterans to develop a solution that works specifically for them. Any current VA Fifth Third borrowers may be eligible to participate in the streamline refinance option (IRRRL) for a lower rate, and in some cases the minimum FICO score requirement may be waived.

The views expressed by the author are not necessarily those of Fifth Third Bank, National Association, and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank, Member FDIC.