What type of mortgage is guaranteed by the Department of Veterans Affairs (VA)?

A mortgage guaranteed by the Department of Veterans Affairs (VA) is specifically designed to assist eligible veterans, active duty service members, and certain members of the National Guard and Reserves in acquiring homes. The VA mortgage does not require a down payment, which makes it an attractive option for borrowers. Additionally, it provides competitive interest rates and does not require private mortgage insurance (PMI), further reducing the overall cost of buying a home.

The VA guarantee helps lenders feel secure in providing loans to veterans, as it mitigates some of the financial risk associated with lending. This guarantee is unique to VA loans and differentiates them from conventional mortgages, which are not backed by any government entity and may require larger down payments and PMI. Likewise, FHA mortgages are those insured by the Federal Housing Administration and not related to the VA. A fixed-rate mortgage refers to the loan structure where the interest rate remains unchanged throughout the term of the loan, which can apply to both conventional and FHA loans, but is not specific to the VA mortgage program.

Thus, the VA mortgage specifically stands out as it is a distinct product specifically aimed at serving those who have served in the military, incorporating tailored benefits that are not available in other types of loans.