For details of the VA Home Loan Guaranty and contact information, visit www.homeloans.va.gov. Key Features · No downpayment · Negotiable interest rate · Limitations on closing costs · Varied repayment terms · Right to repay without penalty · Refinancing options · No mortgage insurance premium More Details · Veterans can apply for VA financing with any participating lender · Veterans must obtain a Certificate of Eligibility from a VA Eligibility Center or a lender that has access to ACE (automated certificate of eligibility) · VA home loans can be reusable · VA home loans are assumable · An unmarried surviving spouse of a veteran who died on active duty or as a result of a service-connected disability is eligible for the home loan benefit Resources http://www.vba.va.gov/ 
ISSUE: The VA adjustable rate mortgage (ARM) program was established by Congress in 1992 as a three-year demonstration program to increase veterans' opportunities for homeownership. Despite widespread appeal within the veteran community and real estate industry, the VA ARM program expired on September 30, 1995 because of budgetary concerns presented by the Congressional Budget Office (CBO). The CBO determined a one-year extension would require $36 million and its cost analysis was based on the ARM experience of Fannie Mae conventional mortgages rather than Ginnie Mae and FHA mortgages, the securitizer of VA loans and the model of its ARM program respectively.
The Veterans Benefits Act of 2002 authorized the VA to carry out a demonstration project to guarantee hybrid ARMs during Fiscal Years 2004 and 2005. The program specifies an initial interest rate that is fixed for a period of at least 3 years but can be adjusted afterwards on a yearly basis. The annual adjustments are limited to 1 percent, and the maximum increase in the interest rate over the life of the loan is capped at 5 percent.
STATUS/OUTLOOK: In the 107th and 108th sessions NAR encouraged Congress to introduce legislation re-instituting the adjustable rate mortgages for veterans as a tool for enhancing homeownership opportunities, particularly first-time veteran homebuyers. The Veterans Benefits Improvement Act of 2004 contains several provisions supported by NAR including extending the authority for VA ARMs until 2008, extending the authority for VA hybrid ARMs until 2008 and providing the Secretary the discretion to limit interest rate increases for hybrid ARMs of more than 4 years. The President signed the legislation into law on December 10, 2004.
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