As you might expect, a VA loan is tailor-made for current military members, veterans and their spouses, as well as other beneficiaries the Department of Veterans Affairs deems eligible. However, the VA doesn’t physically lend you the money. Instead, it insures your loan in conjunction with an outside lender. You are required to pay a VA funding fee for these loans, though, with rates ranging from 1.25% to 2.4% depending on how much you’re putting toward your down payment.
The main draw of a VA loan is its lack of a down payment requirement, meaning it can be used to pay for the entire value of your home. This is an especially valuable feature if you’ve got the income for a monthly mortgage payments, but have struggled to save for a down payment. The VA also lowers the closing costs typically associated with these mortgages, helping to keep your initial costs as low as possible.