Which type of loan is specifically designed for veterans and active service members?

The type of loan specifically designed for veterans and active service members is VA loans. These loans are backed by the U.S. Department of Veterans Affairs and offer several key benefits for eligible borrowers, which include favorable terms such as no down payment, competitive interest rates, and no requirement for private mortgage insurance (PMI). VA loans aim to encourage home ownership among those who have served in the military, recognizing their service and making home buying more accessible.

FHA loans, while popular and designed to assist low-to-moderate-income borrowers, do not specifically cater to veterans or active military personnel. Conventional loans are typical lending products that do not come with government backing and are available to a broad range of borrowers without any specific ties to military service. USDA loans are targeted toward rural homebuyers and focus on promoting economic development in rural areas, making them unrelated to the military. Thus, VA loans are uniquely tailored to support veterans and service members in their home financing needs.