Types and Purposes of VA Loans

The VA loan program allows veterans to purchase a home with no money down and no private mortgage insurance; in some cases, it may be easier to qualify for than a conventional or FHA loan. But have we explained that there are different types of VA loans, each designed for different purposes? (Disclaimer: Wholesale Capital Corporation is not affiliated with or acting on behalf of or at the direction of the Department of Veterans Affairs or any government agency/government-sponsored entity.) Here are some examples.

VA purchase loans: This is a standard VA loan designed for the purchase of a home. Remember, a VA loan is not a loan from the Department of Veterans Affairs; instead, the VA insures the loan so that the lender is protected in the event of a default. This benefits veterans applying for a home loan, because applicants have a better chance of qualifying for a home loan when the lender is protected.

VA cash-out refinance loans: When borrowers need to use some of their home equity for home improvements, education costs or other large expenses, they can apply for a VA cash-out refinance loan (provided that the home has sufficient equity). With this refinance option, the maximum loan amount can represent no more than 100 percent of the property’s value. Said value is determined by a new appraisal.

VA streamline refinance loan: Also called the interest rate reduction refinance loan (IRRRL), this loan allows borrowers to reduce their interest rate by refinancing an existing VA loan with a low funding fee of ½ of one percent. Unlike the VA cash-out refinance loan, a VA streamline refinance loan does not require a new appraisal on the property; it also eliminates the requirements for income documentation and employment verification, hence why it is termed “streamlined.”
The VA Native American Direct Loan (NADL) program: This program helps eligible Native American veterans finance the purchase, construction or improvement of homes on federal trust land, or reduce the interest rate on an existing NADL loan. This program is an especially useful tool in those states that have a great deal of federal trust land, such as California and Arizona.

VA Adapted Housing Grants: This is a program that helps veterans with a permanent, service-connected disability with the purchase, construction of an adapted home or improvement of an existing home to accommodate a disability. Eligible service-connected disabilities for this grant include: *

  • The loss of or loss of the use of both legs
  • Loss of or loss of the use of both arms
  • Blindness in both eyes having only light perception, plus loss or loss of use of one lower extremity
  • Loss or loss of the use of one lower extremity together with the residuals of organic disease or injury, or the loss or loss of use of one upper extremity
  • A severe burn injury
  • Loss of, or loss of the use of one or more lower extremities due to service on or after September 11, 2001, which so affects the functions of balance or propulsion as to preclude ambulating without the aid of braces, crutches, canes or a wheelchair

*Source: Department of Veterans Affairs (VA)

Each local Veterans Service Center employs a VA Rating Decision that determines each applicant’s eligibility for the grant; at WCC, we can help borrowers with the eligibility process for this grant.
The VA specifies that it must be medically feasible for the veteran to reside in the house that the VA Adapted Housing Grant will be used for. However, the VA Adapted Housing Grant can certainly be used for making smart improvements to a house for better accessibility by a wounded veteran.
For more information on the types of VA loans that are available, contact Wholesale Capital Corporation at (855) 640-2020 to speak with one of our knowledgeable, veteran-friendly loan officers. They will be honored to help you.

Wholesale Capital Corporation is not affiliated with or acting on behalf of or at the direction of the Federal Housing Authority (FHA), the Department of Veterans Affairs (VA), or any government agency or government-sponsored entity. WCC is licensed by the California Bureau of Real Estate, Broker License #01147747 and the California Department of Business Oversight Finance Lenders License #603K610. Also licensed in Arizona by the Arizona Department of Financial Institutions, MB #0926199. Equal housing lender. NMLS 9873.