A VA home loan is a loan in which the VA makes a guaranty to the lender of up to 25% of the value of the purchased home. This allows the lending institution to have a certain amount of security in the repayment of the loan and it allows the buyer to purchase the home with no money down.

This service can save the homeowner as much as 20% of the purchase price of the home which is required up front as a down payment in most home loans. There are set limits that the VA will allow and in the amounts of $104,250 for the guaranty, and $417,000 as the FULL home loan.

In the majority of cases, the amounts are equal to the reasonable current value of the home and plus the funding fee. The actual VA loans are made by participating lending institutions such as banks and savings and loans and general mortgage companies.

Lenders view VA loan holders as less of a risk and so they're able to get a home loan with no down payment and in most cases a better interest rate. Even though the VA Bill was set up for veterans and one still must meet certain eligibility requirements in order to secure a VA loan.

Generally, the eligibility rule is that all veterans that have served ON active duty and have been discharged favorably after having spent a minimum service time of 90 days during a time of war and or those who have spent at least 181 days in continuous service during a time of peace are eligible for a VA home loan.

There are also additional requirements which include a two-year service if the veteran had enlisted and began service after September 7 and 1980, or began service after the date of October 16 and 1981 as an officer.

Those who served in the National Guard and in the reserve units are required to have six years in the service, and meet other criteria before being eligible for a VA loan. Just because someone is a veteran doesn't mean they're not held accountable for their credit standing when it comes to securing a VA loan.

Having a good credit history is important when it comes to securing along the matter what the lending source and or who is guaranteeing the loan. A person's credit history not only shows how an individual has handled their payment obligations in the past and it also acts as a roadmap for the lender ON how the individual will handle their finances in the future.

Generally and the VA will pay strict attention to the past 12 months of the applicant's credit history. If there have been any missed or slow payments and the VA will not look favorably upon the applicant as a prospect for a home loan.

In the case of an applicant having had a run of slow or missed payments and the VA will consider the matter as satisfactory once the applicant has made all payments ON time for a length of twelve months.