1. What exactly is a VA home loan?
2. Does a veteran’s home loan entitlement expire?
3. What is the maximum loan amount VA will guarantee?
4. What is a certificate of eligibility, and how do I go about getting one?
5. Once I receive my certificate of eligibility from VA, does that guarantee approval of a VA loan?
6. I used my VA eligibility to buy a home in the past. Can I use it again?
7. Can I have a co-signer on a VA loan?
8. What is the VA funding fee, and why is it required?
9. Will the VA approve a home loan for the purchase a mobile home?
10. Can I use my VA entitlement to buy multiple units?
11. Do you represent non-veterans, who do not have VA Eligibility, in the home purchasing process?
12. How do I benefit by having you represent me as my Buyer’s Agent?
1. What exactly is a VA home loan?
The VA loan was designed to provide housing and assistance for veterans and their families. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.
The VA does not actually lend money. What the VA does is guarantee to the lender that if the borrower defaults on the loan, the VA will pay to the lender a portion of the home loan. VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.
2. Does a veteran’s home loan entitlement expire?
No. Home loan entitlement is generally good until used. However, the eligibility of service personnel is only available so long as they remain on active duty. If they are discharged or released from active duty before using their entitlement, a new determination of their eligibility must be made, based on the length of service and the type of discharge received.
3. What is the maximum loan amount VA will guarantee?
Although there is no maximum VA loan (limited only by the reasonable value or the purchase price), lenders generally limit the maximum VA loan to $417,000 because most VA loans are sold in the secondary market, which limits VA loans to that amount. You may generally borrow up to the reasonable value of the property or the purchase price, whichever is less, plus the funding fee, if required. To determine the reasonable value, VA requires an appraisal of the property.
VA does have provisions for increased loan amounts in recognized high cost areas. Our mortgage experts can provide you with information on those areas.
4. What is a certificate of eligibility, and how do I go about getting one?
VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan. Should you need to request a certificate from VA, you must complete VA Form 26-1880, Request For A Certificate of Eligibility For VA Home Loan Benefits.
5. Once I receive my certificate of eligibility from VA, does that guarantee approval of a VA loan?
No. The veteran must still be found to be qualified for the loan from an income and credit worthiness standpoint. These determinations are made by a qualified lender, just as in any other type of home loan.
6. I used my VA eligibility to buy a home in the past. Can I use it again?
If you have used all or part of your entitlement, you can get that entitlement back to purchase another home if the following conditions for “restoration” are met:
- The property has been sold and the loan has been paid in full.
- A qualified veteran-transferee (buyer) must agree to assume the outstanding balance on the loan and agree to “substitute” his or her entitlement for the same amount of entitlement you originally used to get the loan.
- The buyer must also meet the occupancy and income and credit requirements of the law.
- ONE TIME ONLY if you have repaid the prior VA loan in full, but have not disposed of the property securing that loan, the entitlement you used in connection with that loan may be restored.
Restoration of entitlement is not automatic. You must apply for it by completing and returning VA Form 26-1880 to any VA regional office or center.
Our Mortgage experts will be happy to assist you in getting your restoration established, and can probably accomplish it much more quickly than you could on your own.
7. Can I have a co-signer on a VA loan?
The VA guidelines recognize legally married spouses of qualified veterans as co-signers on VA loans, and can include their income. These loans can be fully guaranteed by the VA. The VA guidelines will allow for more than one eligible veteran(s) to purchase a home. If more than one eligible veteran is involved, VA divides the entitlement charge equally between them, if possible. These loans can be fully guaranteed by the VA. While the VA guidelines may allow for a non-veteran to co-sign for a mortgage loan, lenders may or may not underwrite that type of loan.
8. What is the VA funding fee, and why is it required?
The VA funding fee is required by law. The fee, currently 2.15% on no down payment loans for a first-time use, is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. The funding fee for second time users who do not make a down payment is 3.3%. The idea of a higher fee for second time use is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a down payment. The following persons are exempt from paying the funding fee:
- Veterans receiving VA compensation for service-connected disabilities.
- Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
- Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).
The VA has the final say on who is exempt.
9. Will the VA approve a home loan for the purchase a mobile home?
Yes they will. However, the rules are more strict, and fewer lenders are underwriting this type loan. Our mortgage specialists will be able to help you obtain that type of loan.
10. Can I use my VA entitlement to buy multiple units?
Yes, you can use your entitlement to buy up to four units (one duplex, one triplex or one four-plex). However; you must occupy one of the units as your primary residence. The great thing about this type of purchase is that the rental income can help you qualify for the loan.
11. Do you represent non-veterans, who do not have VA Eligibility, in the home purchasing process?
Yes we do!!! While our primary focus is on Veterans, we are happy to help everyone enjoy the benefits of home ownership. Our mortgage specialists are able to provide excellent service to clients with conventional loans as well as VA loans.
12. How do I benefit by having you represent me as my Buyer’s Agent?
The great advantage to you is that you will have us working for you exclusively. We represent your interest rather than primarily representing the seller’s best interest as a Listing Agent does. Our allegiance is to you. We will negotiate on your behalf to obtain the best possible price, terms and conditions for you and your family.