be used as the veteran’s primary residence.
VA-backed Home Loan
A VA-backed home loan means the U.S. Department of Veterans Affairs guarantees — or stands behind — a portion of the loan a veteran gets from a private lender. This means if the veteran defaults on the loan and the home goes into foreclosure, the lender will recover some or all of their losses. Since these loans are less risky for the lender, they are more likely to loan the money and give those borrowers more favorable terms. Lenders follow VA guidelines when making VA-backed home loans, but may also require borrowers to meet additional standards like having a high enough credit score or getting an updated home appraisal. There are three types of VA-backed home loans available to eligible veterans. • Purchase loans - A purchase loan can be used by a veteran to buy or build a new home, buy a manufactured home or lot, a condo in a VA-approved project, a home with up to four units if the veteran plans to live in one, or even improve a home by adding new features like solar power to make the home more energy efficient. • Interest Rate Reduction Refinance Loan (IRRRL) - n (IRRRL) -An IRRRL is available to veterans who have an existing VA- backed home loan that they want to refinance under better terms to reduce monthly payments or make them more stable by switching from a variable or adjustable interest rate to a fixed one. Also known as a VA streamline refinance, these typically require less paperwork than a traditional refinance, and don’t require a new home appraisal. These loans do require a one-time 112
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