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How to Get In on Veterans Home Loans

BOSTON (MainStreet) -- Banks have tightened mortgage-lending rules a lot these days, but you can still get a good loan with no money down and no private mortgage insurance -- if you're a U.S. military veteran.

"A 22-year-old kid who comes back from a deployment in Iraq or Afghanistan and wants to get married and buy a first house doesn't usually have $30,000, $40,000 or $50,000 for a 20% down payment," says Massachusetts financial planner Dick Power, a retired U.S. Army colonel who often does pro bono work for veterans and active-duty soldiers. "That's where a VA loan comes in."

VA mortgages have been around since World War II, when Congress created them as part of 1944's GI Bill of Rights.

VA mortgages have been around since World War II, when Congress created them as part of 1944's GI Bill of Rights.

These loans allow qualified veterans and active-duty military personnel to borrow as much as $1.1 million in some high-cost real estate markets without putting down a dime. The U.S. Department of Veterans Affairs insures your loan against default, so you won't need costly PMI, either.

"A VA loan is just an amazing product for eligible men and woman who can't or don't want to come to the table with a sizable down payment," says Nathan Long of Veterans United Home Loans, a Columbia Mo., firm that specializes in VA lending.

Here's a Veterans Day look at how these mortgages work:

Who qualifies
Active duty and honorably discharged U.S. military personnel generally qualify for VA loans, as do reservists and National Guard troops who've served at least six years. Some surviving spouses of military people who died while on active duty or from service-related disabilities can qualify as well.

There's no limit on how much you can earn and still qualify, nor is there a cap on how long after you've left the service that you can apply. Veterans generally remain eligible for VA mortgages for the rest of their lives.

The government doesn't typically write your mortgage itself, but provides insurance against default to whatever bank you choose to apply to.

As a result, the lender's standard loan-qualification rules apply.

Although the VA doesn't set a minimum credit score for the program, most banks will require about a 620 FICO score or better to qualify.

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