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02 Dec 08 What is a VA Guaranteed Home Loan?

VA mortgage loans are guaranteed by VA and but the loans are actually made by private mortgage lenders, like banks, credit unions, or mortgage companies that are approved by VA. Veterans seeking financing should remember that these unique loans are for the purchase of a home which must be owner occupied. The guaranty ensures the mortgage lender protection against loss if the loan defaults. The guaranty replaces the protection lending companies receive by requiring a down-payment or by charging traditional private mortgage insurance (pmi).

Many military veterans have been misinformed that their entitlement guarantees that I will be approved for a VA home loan. The Dept. of Veterans Affair cannot force a mortgage lender to approve a loan that does not meet their lending guidelines. VA does not make loans, it guarantees them, so most VA mortgage lenders are comfortable with 100% VA home financing.

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