4 Little Known Facts About VA Loans

4 Little Known Facts About VA Loans

A VA Loan is a government-backed mortgage program available for retired military veterans or active duty service members who have completed the necessary service requirement. These types of loans are also available to fallen veterans’ wives, who can use them to buy a home with little to no down payment.

The advantages of VA loans are vast—however, only as little as 6% of military veterans are actively taking advantage of the program. It’s possible that most military veterans are not aware of its benefits or may be misinformed about certain aspects of the process.

To clarify and set the record straight about it, we came up with four essential features of a VA loan and how qualifying service members can sign up for it. 

VA loans can finance a home with zero down payment

The vast majority of mortgages require down payments. Higher down payments put borrowers in a better position by shortening their terms and taking advantage of mortgage refinance rates in the future. VA loans get rid of this rule altogether, allowing qualified service members to finance 100% of a home’s purchase. 

It’s worth noting that not all VA loans can be 0% downpayment. However, this ultimately depends on a serviceman’s overall financial situation and qualifications at the time of the application. That being said, VA loans can allow down payments for as little as 5%—which would be a theoretical impossibility for conventional loan providers.


VA loans are federally-backed 

VA loans are backed by the US Department of Veteran Affairs, but it is still entirely handled by government-accredited private lenders. This means that while the government sets qualifications for the loan program, it will always be up to the lender to assess a borrower’s qualifications.

That being said, qualifications for it are still guaranteed to be much, much lower than conventional loans. This is because these are guaranteed by the government—which will repay the borrower if a veteran reneges on their obligations. Government backing eliminates many risks associated with conventional lending, which is why lenders feel confident about granting VA loans. 

VA loans skip Private Mortgage Insurance (PMI)

Lenders charge PMI for borrowers to make down payments of less than 20%. The PMI protects lenders in case borrowers default on their bank loans. As mentioned earlier, a VA loan has a significantly lowered risk because the government will repay the lender if the borrower is unable to complete their payments.

Waived PMI loans make the borrowing process even more convenient, as more of the monthly payments will now go towards paying off the principal loan amount. 

VA loans can use gift funds 

Like conventional and FHA loans, VA loans allow borrowers to use gift funds to add to the down payment or offset closing funds. The gifted money needs to come from a close source to the borrowers, such as family and friends, and it must have proper paper trails.

Most lenders require a letter that includes the donor’s information, the relationship to the borrower, and some details regarding the gift amount. Additionally, the letters need to have a legally-accepted way of saying that the gifted funds are not debts that need to be repaid.


No other type of loan will grant borrowers the chance to own a home with little to no down payment. Provided that you’re a member of the US Military and all of its other divisions, you should be qualified for a VA loan. If you’re unsure whether it’s the loan for you, then consulting with a known expert is your best bet.

There’s no need to look for the best mortgage rates in Salt Lake City; Frontline Financial has you covered! We’re proud to serve veterans and help them find their dream homes through VA loans and other options. Contact us today to learn more about our services!


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