I would be happy to explain all the ins and outs of doing a VA loan. I have helped literally hundreds of veterans in the Portland Metro Area purchase properties throughout my career. Please take a moment and goggle VA Specialist David Waite and just see what comes up. Not enought room here to explain the program but I can get you a property with $0 down, $0 closing and the only costs to purchase would be your home inspection and appraisal and your EM deposit which will be returned to you once you close on your purchase. Contact me at 503-887-5323 or email@example.com.
I don't want to dissuade Jon, or any qualified vet, from buying a home or using a VA loan--provided he or she has carefully considered all the possibilities (including his financial ability, family situation, employment prospects, etc.), put away at least six months of living expenses in a savings account, and made a back-up plan.
Each circumstance is different and what may make sense for one consumer may not make sense for another.
As with anything in life, there are risks involved with buying a home. Whether we would like to admit it or not, it is all about timing. My wife and I bought at the top of our purchasing power back in 1995. Looking back today, that was the best thing we have ever done. Unfortunately the same is not true for people that purchased in 2007 or 2008.
In any case, a VA loan is not a bad loan. Like FHA, VA loans are set up to help consumers that are experiencing difficulty with their payments - much more so than a conventional loan.
What you won't find from many sources, especially on the Internet, is a discussion of the hazards of VA loans. And those hazards do exist. By far the biggest risk is occurring in the housing market we have today. I'll explain.
It's important to think long and hard about what your future holds when buying a home. It's even more important when you're buying a home with a no-money-down VA loan. Even if you don't plan to move for 5 years, things can change. A variety of changes in family circumstances (unexpected loss of a job, loss of a family member, new children, etc., etc.) could leave you unable to make payments and unable to sell your home.
To sell your home, you have to have equity, which provides the money to pay the costs of sale. But if you buy without a down payment, you have no equity in either a down market or a stable market. Even when the market is appreciating, it can take years to build enough equity to pay sale costs. Having insufficient funds to sell can lead to snowballing debt and destruction of your credit history. This usually doesn't happen instantly. It builds over time. By the time you recognize that you're in trouble, it's too late. You lose the home, and you can't buy another. Even finding a good rental is hard because of your bad credit.
When purchasing a home, it's important to analyze your circumstances, and only buy if you have a solid back-up plan for the hard times that will come. (A lot of people are having a tough time now--including a lot of ex-REALTORS--because they never had a back-up plan). You won't hear this from many REALTORS who are still in the business, but it's often better to put off a purchase and save money for a down payment than to buy without a down payment. You'll also hear a lot of REALTORS and loan officers try to push you into "as much house as you can afford."
Don't be tempted. Buy as little house as you can get by with, and put away money for your future. (You can always "buy up" to a bigger house after you have established a more solid financial base.) A house should be looked at as only one part of a diversified portfolio of investments that includes bank savings and a variety of other investment vehicles.
Some REALTORS will tell you pie-in-the-sky stories about old ladies who bought their houses for $27,000 in 1964, and sold in 2005 for $1.2 million. But those REALTORS won't tell you about all the other people who bought in 1974 for $27,000, and lost their job in 1975, then lost their home in 1976 with their credit in a shambles. They won't tell you about the vet who bought for $135,000 with no money down in 1990, but then had to sell 18 months later because of a job transfer, but couldn't sell because the market had fallen. They won't tell you about the mid-level manager who bought for $550,000 in 2007, then lost his job in 2009, and is losing his home in foreclosure today because he can't find a buyer, even just for the $460,000 he owes on the note.
A lot of "professionals" here will talk up the up side of home ownership, but few will mention the down side. For a source with a little more balance of good and bad news, check here: http://www.daveramsey.com/article/the-truth-about-real-estat
Best of luck.
Lastly, the tax credit expired for eveyrone except for Vetes. For eligible Vets, the tax credit is good for an extra year! Having worked with VA loans for over 20 years, I can honestly say that VA loans are a great way to purchase a property.