VA mortgage loans or VA loans help make it easier for a lot of veterans to get funds necessary to buy a home. Usually, VA loans don’t need a down payment. This is available only to military veterans and those who are on active duty. The loans are done through private lenders. Once a vet takes a loan out, the Department of Veterans Affairs (VA) provides a guarantee. Hence, no mortgage insurance will be necessary. Vets are also not required to provide a minimum credit score to qualify for a loan.
This is one of the major differences between VA loans and loans provided to retirees. Although they are also given some opportunities, VA loans are easier and more comprehensive. If vets apply for loans using conventional mortgages, it could be more challenging. As long as lenders meet the guidelines provided by the government, they can offer their loans to vets.
Only certain types of homes are allowed
Although it is a good thing that vets can have easier access to loans with the help of the VA, they are only allowed to buy certain properties. These are usually in move-in ready condition. Single homes, condos and modular housing are allowed. Other choices like working farms or downtown delis are not. Vacation homes are also not allowed either. Homes are mainly used for residential purposes only. Retirees, on the other hand, are allowed to choose any type of home they wish to purchase.
The VA does not provide the loans
The Department of Veterans Affairs provides a guarantee for vets who take these loans. They don’t provide the loans themselves, but you can search online for a list of VA home loan lenders that has been approved by the Department of Veteran Affairs. If not on this list, they might not provide the guarantee. Since the VA is a government agency, lenders are more confident about providing the necessary loans.
Vets with a history of bankruptcy can still get a loan
Despite a history of bankruptcy, vets are still allowed to take out a VA loan. Even those who have experienced foreclosure before can still make use of a VA loan. Obviously, there is no such guarantee for retirees.
Not anyone can be a co-borrower
For other types of loan programs, you can get anyone as a co-borrower. This is not the same when it comes to VA loans. When you have a co-borrower who is not your spouse or another vet having a loan entitlement, you are required to pay a down payment.
There is no prepayment penalty
Prepayment is usually done in order to make instant payments when necessary. For some types of loans though, there is a penalty when it is done. This is not the same with VA loans. You can even structure the payments so that they are automatically deducted from monthly income to avoid worrying about the payments.
These are among the many reasons why VA loans and the ones retirees can get are totally different.