Uncle Sam Offers Special Loan Programs
Several government agencies help veterans get loans for homes, farms, and
businesses. Although the loans are generally made by commercial lenders, government programs
make it easier for veterans to borrow the money.
Note:
Loan amounts are usually based on highest income being earned at the time of loan
approval; therefore, you may want to consider making large purchases (home, farm, or business)
prior to separation if your active duty income would be higher than your post-Service income.
VA Home Loans
Eligible veterans, including active duty veterans, discharged veterans, and reservists, may
obtain loans guaranteed by the Department of Veterans Affairs (VA) to purchase or refinance homes,
condominiums, and manufactured homes. Unmarried surviving spouses may also be
eligible. VA home loans feature a negotiable interest rate, choice of loan types, limited
closing costs, no monthly mortgage insurance premium, and no down payment is required in most
cases.
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Down payment: A traditional feature of VA home loans is that they typically
require no down payment. A down payment is required if the home's purchase price exceeds the
reasonable value of the property, the property being purchased is a manufactured home not
permanently affixed, or the loan type is a Graduated Payment Mortgage.
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Verification: You will find many lenders to choose from, since most mortgage
companies, banks and credit unions participate in this program because the VA guarantees a portion
of the loan amount which protects them from loss if the loan should ever go to
foreclosure. The lender will ask you to provide evidence, in the form of a Certificate of
Eligibility (COE), that you are eligible to apply for a VA home loan. In many instances your
lender will be able to obtain your COE online in seconds.
You can get a Certificate of Eligibility (COE) in any of three ways:
- Apply online. Go to eBenefits online at
https://www.ebenefits.va.gov/ebenefits-portal/ebenefits.portal
and select the Log I link under the Housing section on the bottom right. You will need login
credentials to request a Certificate of Eligibility (COE).
- Apply through the lender. Your lender can submit your application online for you.
- Apply by mail. Use VA Form 26-1880 at
http://www.vba.va.gov/pubs/forms/vba-26-1880-ARE.pdf.
If you can't print the form, just call 1-888-244-6711 and follow the prompts for Eligibility.
This benefit may be used more than once. More detailed information on VA Home Loans is
available on the Internet at
http://www.benefits.va.gov/homeloans/ .
FHA Mortgage Insurance
The Federal Housing Administration (FHA) of the Department of Housing and Urban Development
(HUD) insures mortgage loans for the construction, purchase, and improvement of
homes. FHA-insured mortgages allow veterans to borrow with minimum down payments and over
longer periods of time. Application is made directly to any FHA-approved lender; the lender
usually serves as the homebuyer's contact with FHA throughout the loan approval
process.
Any local HUD field office can provide additional information; look in your local telephone
directory for the office nearest you.
Business Loans
Business loans are available to veterans through programs of the Small Business Administration
(SBA). In addition, SBA offers loans specifically to Vietnam-era and disabled
veterans. Contact the nearest SBA office for details.
Rural Loans
The Farmers Home Administration is the rural credit agency of the Department of
Agriculture. This agency has both direct and guaranteed loan programs that give preferential
processing to veterans' loan applications.
To obtain information and applications, contact the nearest office of the Farmers Home
Administration. Most are located in rural county seats.
Bad Credit Reports
Obtain a copy of your credit report before you are released from full-time active
duty. Review it thoroughly. This can be accomplished—for free—by going to:
http://www.annualcreditreport.com/
or calling 1-877-322-8228, or writing to Annual Credit Report Request Service, P.O. Box
105281, Atlanta, GA 30348-5281.
If you find any mistakes on your credit report, resolve them immediately. You should
obtain a copy of your credit report, and review it thoroughly, at least once a
year.
Here is additionl information on each of the National Credit Reporting Companies:
After receiving your credit report, take steps to correct any incorrect information and to add
any omitted favorable information. You can do this by pointing out the errors and providing
the credit agency with supporting documentation that it may not have in your file.
Date Last Reviewed: September 28, 2011
