VA (Veteran’s Administration) loans are for those men and women who are serving or have served in our Nation’s Armed Forces. These loans are backed by HUD (Housing and Urban Development) and offer special benefits to those who are eligible.
Guidelines and Parameters
A VA ARM has two components—the first number represents how long the interest rate will remain fixed, or that the interest rate will not change for that period of time. The second number tells you the length of time and frequency the loan will adjust once the variable portion kicks in. Like traditional ARMs, VA ARMs use predetermined caps and margins that work in concert with monetary fund indexes to establish the interest rate when the loan adjusts. VA ARMs differ from their conventional counter parts in that the margins and caps in place are typically lower and offer a greater benefit to the qualified candidate. Currently the VA offers this ARM type:
- 5/1 ARM: Your interest rate is set for 5 years then adjusts for 25 years.