VA Loan Types

FIXED RATE LOANS:

• The VA offers traditional fixed rate mortgage loans

TRADITIONAL ARM:

• VA can guarantee loans made with the one-year ARM feature. The interest rate may be increased or decreased a maximum of one percent on an annual basis. The maximum increase in the interest rate over the life of the loan is 5 percent.

HYBRID ADJUSTABLE RATE MORTGAGE:

• VA may also guarantee loans with the Hybrid ARM feature. The interest rate on a Hybrid ARM remains fixed for a period of at least 3 years, after which the rate can be adjusted annually. If the initial interest rate remains fixed for less than 5 years, the first rate adjustment is limited to a maximum increase or decrease of one percent and the maximum increase in the interest rate over the life of the loan is 5 percent. If the initial interest rate remains fixed for 5 years or more, the first rate adjustment is limited to a maximum increase or decrease of two percent and the maximum increase in the interest rate over the life of the loan is 6 percent. After the first rate adjustment, subsequent annual adjustments are limited to a maximum of two percent.