WHAT IS A VA LOAN?
The VA Loan became known in 1944 through the original Servicemen's Readjustment Act also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. The GI Bill contributed more than any other program in history to the welfare of veterans and their families, and to the growth of the nation's economy.

With more than 25.5 million veterans and service personnel eligible for VA financing, this loan is attractive and has many advantages. 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.

VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program.

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.

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VA LOAN LENDING LIMITS
MAXIMUM GUARANTY AMOUNT
REGULAR VA LOAN - $0 Down up to $729,750 in qualifying areas

The Veterans Benefits Act of 2004 was signed by the President on December 10, 2004. The law changes the maximum guaranty amount of $60,000, for certain loans in excess of $144,000, to an amount equal to 25 percent of the Freddie Mac conforming loan limit determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a single family residence, as adjusted for the year involved.

To illustrate, the maximum guaranty for 2008 would be $104,250. This is for 25 percent of the 2008 Freddie Mac conforming loan limit for a single family residence of $417,000.

While many Veteran's felt left behind on the higher loan limit increases recently passed by other housing agencies, there is some encouraging news coming from the recent signing by the President of the H.R. 3221 called the Housing and Economic Recovery Act of 2008. The section calls for the Temporary Increase in Maximum Loan Guaranty Amount for Certain Housing Loans Guaranteed by the Secretary of Veterans Affairs.

For all locations in the United States other than Alaska and Hawaii, the maximum guaranty amount is 25% of the greater of: (a) $417,000 or (b) 125 percent of the area median price for a single-family residence, up to $729,750. Qualifying customers can now apply for a regular VA Loan with $0 down up to the $729,750 in qualified counties.

To see the $0 Down amount for the single family home limit in your county, simply click on the applicable state.

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VA LOAN CLOSING COSTS
The veteran can pay a maximum of all reasonable and customary amounts for any and all of the "Itemized Fees and Charges" designated by VA as defined below plus a 1% flat charge by the lender plus reasonable discount points. Some special provisions apply to construction, alteration, improvement and repair loans.

HOW TO HAVE MINIMAL TO NO CLOSING COSTS
Please note that often times veterans believe that closing costs are covered by a VA mortgage. While that is not technically true, the same effect can be reached through careful structuring of your real estate contract. The loan amount will be the purchase price or appraised value, whichever is less (plus the VA Funding Fee). So if you want your closing costs covered by the loan, you need to increase the price and have a stipulation with the seller will pay the closings costs and pre-paid expenses equal to the amount by which you have increased the price. As long as the home appraises for the increased price, you will have the closing costs paid as part of the deal. Closing costs and pre-paid expenses can vary widely with 3% - 5% as the range for most places. If you want a more specific number in this regard after you have started looking for properties, we can provide you with a Good Faith Estimate for a particular property that you have an interest.

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ITEMIZED FEES AND CHARGES
The VA defines allowable fees and charges that the veteran borrower can pay or closing costs that may be charged to the borrower. These costs are determined as reasonable and customary by each local VA office. All other costs in the transaction are considered non-allowable and generally paid by the seller when purchasing a new home or by the lender when refinancing your current VA mortgage. Itemized fees and charges are as follows:

APPRAISAL AND COMPLIANCE INSPECTIONS
The veteran can pay the fee of a VA Appraiser and VA compliance inspectors. The veteran can also pay for a second appraisal if they are requesting a reconsideration of value. The veteran cannot pay for a second appraisal if the lender or seller is requesting a reconsideration of value or if parties other than the veteran or lender request the appraisal.

RECORDING FEES
The veteran can pay for recording fees and recording taxes or other charges incident to recordation.

CREDIT REPORT
The veteran can pay for the credit report obtained by the lender.

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PREPAID ITEMS
The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.

HAZARD INSURANCE
The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.

FLOOD ZONE DETERMINATION
The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.

SURVEY
The veteran can pay a charge for a survey, if required by the lender.

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TITLE EXAMINATION AND TITLE INSURANCE
The veteran may pay a fee for title examination and title insurance, if any. If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.

SPECIAL MAILING FEES FOR REFINANCING LOANS
For refinancing loans only, the veteran can pay charges for Express Mail or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling.

VA FUNDING FEE
Unless exempt from the fee (10% minimum disability from the VA), each veteran must pay a funding fee to VA.

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OTHER FEES AUTHORIZED BY THE VA
Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may request VA to approve such a fee if it is, (a) normally paid by the borrower in a particular jurisdiction, and (b)considered reasonable and customary in the jurisdiction.

The following list provides examples of items that CANNOT be charged to the veteran as "itemized fees and charges." Instead, the lender must cover any cost of these items out of its flat 1% fee.

Loan closing or settlement fees, document preparation fees, preparing loan papers or conveyance fees, attorneys services other than for title work, photographs, interest rate lock - in fees, postage and other mailing charges, stationery, telephone calls and other overhead, amortization schedules, pass books, and membership or entrance fees, escrow fees or charges, notary fees, preparation and assignment of mortgage to other secondary market purchasers, trustee's fees or charges, loan application or processing fees, fees for preparation of truth-in-lending disclosure statement, fees charges by loan brokers, finders or other third parties, and tax service fees.

When reviewing allowable borrower fees and charges, many of the items can be paid for by the seller of the home and can be negotiable when presenting an offer on a home to the seller. Please consult with your Real Estate Professional handling the transaction.

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VA MORTGAGE DEBT-TO-INCOME RATIO
According to VA guidelines, borrowers and / or their spouse must qualify according to set debt ratios which are used to determine whether the borrower can reasonable be expected to meet the expenses involved with home ownership.

TOTAL FIXED PAYMENT TO EFFECTIVE INCOME
Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, homeowners' dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 41%. In the event the number exceeds the 41%, the VA has a residual income guideline which can allow approval, yet are not considered a compensating factor.

Example:
Total amount of new house payment:	$650
Total amount of monthly revolving debt:	$300
Total amount of monthly recurring debt:	$950
Borrower's gross monthly income (including spouse, if married):	$2,400
Divide total house payment by gross monthly income:	$950/$2,400
Debt to income ratio:	39.58%

Please note that the above indicators do not exclusively determine whether or not a veteran will qualify for a VA loan. Compensating factors may affect the loan decision. These factors are especially important when reviewing loans which are marginal with respect to residual income or debt-to-income ratio. They cannot be used to compensate for unsatisfactory credit.

Some compensating factors include, but are not limited to the following:

Excellent credit history

Conservative use of consumer credit

Minimal consumer debt

Long-term employment

Significant liquid assets

Military benefits and more

 

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VA LOAN FUNDING FEE
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.

For purchase and construction loans, members of the regular military fall into the category of first time user or subsequent user. For first time users, no down payment requires a 2.15% fee, up to 10% down payment requires a 1.5% fee, and 10% or more requires a 1.25% fee. For subsequent users, no down payment requires a 3.3% fee, up to 10% down payment requires a 1.50% fee, and 10% or more requires a 1.25% fee.

For the category of Reserves / National Guard, first time users with no down payment requires a 2.4% fee, up to 10% down payment requires a 1.75% fee, and 10% or more requires a 1.5% fee. For subsequent users, no down payment requires a 3.3% fee, up to 10% down payment requires a 1.75% fee, and 10% or more requires a 1.5% fee.

Cash-out refinancing loans for regular military requires a 2.15% fee for first time users and a 3.3% fee for subsequent users. For Reserves / National Guard, the requirement is a 2.4% fee for first time users and a 3.3% fee for subsequent users. On interest rate reduction loans, the VA funding fee is .50% and it is 1.0% on Manufactured Home Loans.

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).

Please note that the VA has the final say on who is exempt.

 

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VA LOAN CREDIT ISSUES
VA will analyze a borrower's past credit performance in determining the loan for approval. A borrower who has made timely payments for the last 12 months serves as a guide and demonstrates their willingness to repay future credit obligations. On the opposite side, a borrower who reflects continuous slow payments, judgments and delinquent accounts is not a good candidate for loan approval.

Below is a list of items concerning the borrower's credit.

LATE MORTGAGE PAYMENTS
In circumstances not involving bankruptcy, satisfactory credit is generally considered to be reestablished after the veteran, or veteran and spouse, have made satisfactory payments for 12 months after the date of the last derogatory credit item(s).

When the underwriter analyzes the borrowers credit; it is the overall pattern of credit behavior that must be reviewed, rather than isolated cases of slow payments. A period of financial difficulty does not disqualify the borrower if a good payment pattern has been maintained since then.

Account balances reduced to judgment by a court must either be paid in full or subject to a repayment plan with a history of timely payments.

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NO CREDIT HISTORY
In the area of credit, the lack of an established credit history should not be a deterrent to loan approval. As provided in the credit standards, a satisfactory payment history on items such as rent, utilities, phone bills, etc., may be used to establish a satisfactory credit history.

CHAPTER 7 BANKRUPTCY
The VA guidelines state that a minimum of two years must elapse since the discharge date of the borrower and / or spouse's Chapter 7 bankruptcy, not the filing date. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

CHAPTER 13 BANKRUPTCY
The VA guidelines state that they will consider a borrower still paying on a Chapter 13 Bankruptcy if the payments to the court have been satisfactorily made and verified for a period of one year. In addition, the court trustee will need to give written approval to proceed. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

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COLLECTIONS, JUDGEMENTS AND FEDERAL DEBTS
The VA guidelines state that if a collection is minor in nature, it usually does not need to be paid off as a condition for loan approval. Judgments must be paid in full prior to closing. A borrower is not eligible for the loan if they are delinquent on any federal debt. This can include tax liens, student loans, etc. Payment arrangements that would bring the borrower up to date may be considered for loan approval.

FORECLOSURE
A borrower whose previous residence or other real property was foreclosed on or given a deed-in-lieu of foreclosure within the previous two years since the disposition date is generally not eligible for a VA insured mortgage. If the foreclosure was on a VA loan, the applicant may not have full entitlement available for the new loan.

CONSUMER CREDIT COUNSELING PLAN
If a veteran, or veteran and spouse, have prior adverse credit and are participating in a Consumer Credit Counseling Plan, they may be determined to be a satisfactory credit risk if they demonstrate 12 months' satisfactory payments and the counseling agency approves the new credit.

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THE LAW ON OCCUPANCY
The law requires a veteran obtaining a VA guaranteed loan to certify that he or she intends to personally occupy the property as his or her home. As of the date of certification, the veteran must either (1) personally live in the property as his or her home, or (2) intend, upon completion of the loan and acquisition of the dwelling, to personally move into the property and use it as his or her home within 60 days after the loan closing (reasonable).

The above requirement applies to all types of VA guaranteed loans except Interest Rate Reduction Refinancing Loans (IRRRLs). For IRRRLs, the veteran need only certify that he or she previously occupied the property as his or her home.

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CO-SIGNORS OR JOINT VA LOANS
The VA guidelines recognize legally married spouses of qualified veterans as co-signors 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, they will not fully guarantee the loan. The VA Guarantee is limited to that portion of the loan allocated to the veteran's interest in the property. That means the VA will not fully guarantee this type of loan and our company cannot originate loans that are not fully guaranteed by the VA.

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VA MORTGAGE CHECKLIST
Before you start the loan process, you'll need to have some information at hand for all loan applicants:

Social Security numbers

Residence addresses for the past two years

Names and addresses of your employers over past two years

Your current gross monthly salary

Names, addresses, account numbers and balances on all checking and savings accounts

Names, addresses, account numbers, balances and monthly payments on all open loans

Addresses and loan information of other real estate owned

Estimated value of furniture and personal property

Certificate of Eligibility

(for veterans only)

W2's for the past two years and current check stubs

For self-employed individuals, you will need to provide personal tax returns for the past two years, current income statement and balance sheet for the business

In addition, you will need to pay for a credit report and appraisal of the property.

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VA REFINANCE

Whether you need money to consolidate high interest credit card debt, pay for college tuition, buy a new car, or make home improvements to your home, we can find a way to get you the cash you need through a refinance.

A VA refinance transaction involves repayment of your current real estate debt from the proceeds of your new VA mortgage that has the same borrower(s) using the same property. This is called a "Cash Out" Refinance.

Cash-Out Refinances are used for homes that are used as a principal residence by its owner. That owner can refinance for up to 90% of the appraised value (Not available in Texas) plus all closing costs if the property can withstand the designated loan to value ratio. There is no minimum amount of time that you must own your home, yet your home must have sufficient equity to qualify for the loan.

Definition of a VA Loan - What is a VA loan?
The VA loan began in 1944 through the original Servicemen's Readjustment Act, also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. 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.

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Using the VA Loan is a Good Idea
The more you know about our home loan program, the more you will realize how little "red tape" there really is in getting a VA loan. These loans are often made without any downpayment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer's loan can be processed and closed by the lender without waiting for VA's approval of the credit application.

Uses for a VA Loan
To buy a home (including townhouse or condominium unit in a VA-approved project), to build a home, to simultaneously purchase and improve a home, to improve a home by installing energy-related features, or to buy a manufactured home and/or lot. On manufactured homes, there must be land included with the home and the home must be at least 24 feet wide. The manufactured home must have an identifiable tag.

The maximum amount of guarantee the VA will allow on a home loan and maximum loan amounts
The maximum guarantee authorized by the VA is 25 percent of the loan amount up to $104,250. The maximum VA home loan is $417,000. The maximum guarantee in the states of HI and AK is 25 percent of the loan amount up to $156,375. The maximum VA home loan in these states is $625,500.

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What can be done when both husband and wife are eligible?
They may acquire property jointly, but the amount of guarantee on the loan may no exceed the lesser of 40 percent of the loan amount or $36,000 ($104,250 for certain loans over $144,000).

I am a Veteran who purchased a home with my spouse utilizing my VA eligibility. I am now divorced and my spouse was awarded the home. How do I get my eligibility back?
When the property is awarded to the Veteran's spouse as a result of the divorce, entitlement cannot be restored unless the spouse refinances the property and / or pays off the VA loan in full or the ex-spouse is a veteran who substitutes their entitlement.

I heard the VA has an inventory of foreclosed homes. How can I find out more about this?
The Department of Veterans Affairs (VA) acquires properties as a result of foreclosures on VA guaranteed loans. These acquired properties are marketed through a property management services contract with Ocwen Federal Bank FSB, West Palm Beach, Florida. The properties are listed by local listing agents through local Multi Listing Systems (MLS). A list of properties for sale may also be obtained from Ocwen's website at http://www.ocwen.com/ . If you are interested in buying a VA-acquired property when it is listed for sale by Ocwen Federal Bank FSB, please contact a local real estate broker of your choice to see the property. Interested Listing Brokers and subcontractors may also access Ocwen Federal Bank's website for information on selling VA-acquired properties.

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VA Home Loan Entitlement
Some first-time homebuyers are misinformed as to the workings of a VA Loan. The Veterans Administration does not normally act as a lending agent. Instead, the VA is in the business of guaranteeing the loans of veteran. In most cases, the VA offers a guaranty to those who meet the requirements, the first of which include a good credit rating. If you are considering any kind of home loan, it's best to consult a credit counselor and a financial planner to find out what credit rating you already have and what you can do to improve your credit rating before applying for the guaranty. It's important to know that a VA home loan guaranty is available only if the veteran has the income to handle house payments. A VA loan guaranty is not an automatic benefit. Your financial planner or credit counselor can go a long way towards helping you prepare your personal finances before filling out that home buyer's paperwork.

The VA Guaranteed Loan – Advantages
If you are looking to purchase a home with no money down, you're in luck if you qualify. VA mortgage loans can be guaranteed with no money down in most cases up to $417 thousand dollars. An added bonus? No private mortgage insurance requirement with a VA guaranteed loan. The VA even offers help for those looking to refinance. Don't investigate these benefits without asking for information about the interest rate reduction loan, part of something called the Streamline Refinancing Program, which allows veterans to refinance at little or no expense to them. VALoans.com can give you all the details you'll need to take full advantage of your VA home loan benefits.

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Adjustable Rates - Do I have to take a fixed-rate VA loan?
Veterans who shop around will learn it's possible to get a fixed rate loan, negotiated with the lender of your choice. Another option? The adjustable rate loan, where interest may be adjusted one percent annually, up to five percent over the duration of the loan period. Which to choose? No matter which way you think is best, do your homework, shop around and get the best rate possible. Some make the mistake of taking the first offer that sounds fair, but don't be intimidated by the process. You may be eager to get the "hard part" over with and get into a home. Take some time to research the biggest purchase of your life! When in doubt, consult an expert, a legal advisor or a trusted friend in the real estate business. The more research you do, the better you'll feel at closing time. The VA is in the business of loan guaranty, but the choice of which loan to take is strictly up to you. It's also a good idea to look for businesses who make a habit of cultivating customers who are veterans--you may find their expertise in VA matters quite valuable to reduce unnecessary waiting times on paperwork.

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Get Pre-Approved / Should I get a pre-approved loan?
Obtaining pre-approval for your VA loan amount is an excellent time-saving step. Once you know the exact amount you're eligible for in your VA home loan, you can begin searching for a home as a 'serious buyer'. You'll know in advance exactly what you can afford and what is outside your price range. It's the kind of security you'll be grateful for as you search for the best value for your money. With pre-approval, you avoid wasting time with property that's out of your price range or sellers who are unsure whether you mean business.

Are You Eligible for a VA Home Loan Guaranty - How do I get proof of eligibility?
It's easy to use an online program called ACE--the Automated Certificate of Eligibility--to get started in the VA loan guaranty process, yet can only have this done by a VA approved lender. Unfortunately, the automated system won't work for everyone. Some people don't have enough information in the ACE database, and are required to fill out a VA Form 22-1880, a Request for Certificate of Eligibility. If this applies to you, simply fill out the form and mail it to your regional Eligibility Center along with supporting paperwork including a copy of the DD214 discharge paperwork. Don't send originals of the DD214, a photocopy will do. The certificate of eligibility process can be tricky for veterans who were separated from the military with a discharge other than honorable. In this case the VA must investigate the discharge to insure it was not classified as dishonorable. People who fall into this category should seek help from their local VA office, especially if you need to file an appeal to the results of your request of eligibility.

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Your Discharge May Affect Your Chances - I don’t have an honorable discharge. Am I automatically disqualified from VA loan eligibility?
The nature of your discharge can affect your eligibility for a VA loan. The certificate of eligibility process gets complicated for veterans separated from the military with a discharge other than honorable. In these cases the VA checks to see if the discharge was classified dishonorable. If you had an 'other than honorable' discharge, seek help from their local VA office, it's best to get some expert advice on what additional information to file, where to send the paperwork and what to do if an appeal is necessary. Be sure to include copies of your DD214 form, plus any paperwork or documentation showing that you either didn't receive a dishonorable discharge, or had your discharge upgraded, modified, or corrected.

I Lost My DD214 - What if I can't find my DD214 form?
Those who have been discharged, separated or retired should keep multiple copies of the DD214--your discharge paperwork. It's the most important military document in your records. This is proof of your military status, whether you are retired, separated, discharged. It also displays the nature of your discharge, and what your status is with the National Guard or a Reserve Unit. The lack of a DD214 form can bring some of your VA processes to a halt, but fortunately you can get a replacement copy by writing to the National Personnel Records Center. Enclose a completed form SF-180 along with a letter stating the reason for your request, you name, rank, social security number. If you are a recently discharged military member who separated or retired at an overseas location, remember that your DD214 form may be delayed overseas for up to a year before it becomes part of the National Record Center archives. If this is the case, you contact the orderly room, First Sergeant or Sergeant Major in charge of where you separated or retired and request a copy directly from your final base.

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Already Have a VA Loan? - Is it possible to use my VA eligibility more than once?
Check with your lender about interest-rate reduction refinancing on your existing VA loan. This is a great advantage and there's no need to re-establish VA loan eligibility. Instead, ask your lender to use the VA's "email confirmation procedure". You may also re-use your VA loan eligibility for another VA loan. The requirement here includes having completed payments on the previous note, and you must no longer own the property. When applying for re-eligibility, include copies of the paperwork that proves your old VA loan has been paid off-a "paid-in-full" letter from your bank, or a copy of the "HUD-1 settlement statement."

A One-Time Deal / What is the one-time exception for renewing VA eligibility?
A VA certificate of eligibility is renewable on a one-time basis. You qualify if the existing VA loan is paid in full, but you still own the property. Under the rules, you ordinarily must prove the property has been sold, but thanks to the one-time exception you may renew the VA certificate of eligibility. All you need to do is complete VA form 26-1880 and send it to the nearest VA Eligibility Center. Remember that getting released from liability for a VA loan or having a debt waived by the VA is not the same as paying off the loan. In that case you'll have to pay back the government's loss. Once that is done, the certificate of eligibility may be renewed.

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Partial Eligibility - Can I get eligibility for another VA loan even though I am still working on the first one?
If you have an existing VA loan, you may still be able to get VA loan eligibility for second loan. A VA certificate of eligibility may be available for any unused amount of what you are entitled to receive. You'll have to negotiate a downpayment with the lender, and your leftover eligibility may not be sufficient for the entire amount of the second loan. Partial eligibility is sometimes complicated, and it's best to get the advice of a VA rep before filling out any paperwork.

VA Loans and Rental Properties - Can I use my VA loan to buy a rental property?
The idea of buying a building intended as a rental property is sound-but VA mortgages aren't intended for this purpose. If you buy a home with a VA home loan, you must certify that you intend to "personally" live in the house. There are naturally exceptions made for houses that are in the building stages when the sale is made, but the general rule is you must occupy the house within sixty days of the loan closing. The occupancy requirement applies to all VA guaranteed loans except one; the Interest Rate Reduction Refinancing Loan or IRRRL. For these loans, the veteran is required to certify that the dwelling was previously occupied as the home.

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Bankruptcy and VA Eligibility - What happens if I file bankruptcy and wish to buy another home at some point?
Veterans who file for bankruptcy are still allowed to use a VA home loan if they are eligible. Unfortunately the process does require a waiting period. You are allowed to purchase another home two years after the "discharge date" of your bankruptcy. Keep in mind that the filing date does not factor in-you must wait the two years after bankruptcy has been discharged. Once you are eligible to buy another home, the usual credit and income requirements apply.

VA Loans and Your Debt Ratio - How is my VA home loan eligibility determined?
To qualify for a VA home loan, you must fall into a certain debt ratio. Your income, credit card debts and the new indebtedness created by the VA mortgage are all tallied up to see where you land in terms of debt. The maximum debt ratio you may have and still qualify for a VA home loan is 41%. This is only one factor used to determine eligibility, the others include your reliable income and credit rating. If you are considering applying for a VA home loan, you may wish to make an appointment with a financial planner and debt counselor to see how you might improve your standing in advance of the application process.

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The VA Loan for Home Equity Refinancing - Can I refinance with the VA?
" If you own a home and are considering refinancing, VA refinancing may be just what you need. Under the terms of VA refinancing, your current real estate debt is paid out of the proceeds of a new VA mortgage. The requirements? The same borrower must use the same property as before. This type of refinancing is also known as a 'Cash Out"" refinance, and is only good for homes that are used as the owner's residence. Refinancing is available for up to 90% of the appraised value plus all closing costs in many cases. Your home must have enough equity to cover the loan. These terms may not be available in all states, depending on local lending laws. Check with your local VA rep to learn more."

What VA Loans Are Used For - Am I limited to buying an existing home with a VA loan?
A VA home loan has more flexibility than you might think. While many use this benefit to purchase existing homes, there are many other applications. Did you know you a VA home loan may be used to purchase and improve a home at the same time? You may also use a VA loan to improve your existing home by increasing energy efficiency. There is also a provision for people to use a VA loan to purchase a manufactured home and lot, under the right conditions. There are many applications for a VA home loan, sometimes all you need to do is ask!

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Does the VA Charge A Fee? - Are there fees associated with my VA home loan?
There is a "VA funding fee" required by law. A first-time buyer will pay a little over two percent for a 'no money down' loan, and a second time buyer's fee is just above three percent. The reason for the fee includes the idea that the veteran is reducing taxpayer burden by contributing to the cost of his VA mortgage. The higher fee for second-time borrowers presumes that there is equity in the home, or the borrower has had plenty of time to save in order to pay for the extra percentage. There is also a fee for VA refinance loans, and they fall within the same general price guidelines; just above two percent for first-timers and just above three percent for those who borrow again.

VA Fees Part 2 - Who is exempt from paying the VA funding fee?
While there is a funding fee for a VA home loan, some people are exempt from paying. If you are a veteran getting disability compensation for service-related medical issues, or are entitled to get compensation if you aren't drawing retirement pay, you are exempt from the VA funding fee for your VA home loan. Also, surviving spouses of those who died in the service, or from service related disabilities are also exempt. It doesn't matter in this case whether the spouse has any of their own entitlements. Remember that the VA has the last word on who is exempt, and some issues may be dealt with on a case-by-case basis. If you have any doubts, ask your local VA rep to review your service records (or your spouse's records) and get a determination from the VA.

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Co-signers on VA Loans / Can I bring on a co-signer on my VA home loan?
It's true that the legally married spouse of a military member or veteran can co-sign a VA loan. There is no "penalty" for doing so, the veteran loan is still fully guaranteed by the VA. Two unmarried military members are also able to co-sign on a VA loan with the same results. When a military member or veteran wants to bring an unrelated, non-military cosigner, the VA allows this with one major exception. The VA guarantee is limited to the amount of the veteran's interest in the property. Some companies won't allow these types of "mixed" loans, so you may have a bit of shopping around to do before finding a lender willing to work with you. If you find yourself in this position, give yourself plenty of extra time to hunt for the right lender.

The Veterans Benefits Act of 2004 - How does the Veterans Benefits Act change my loan process and entitlements?
The Veterans Benefits Act of 2004 made many changes to the VA loan process. If you haven't had to get eligibility or otherwise deal with the VA for a loan since the act passed, you may be surprised at the changes. One of the major differences; the maximum guaranty amount of $60,000 has been modified. Now, for qualifying loans in excess of $144,000, the maximum is a sum equal to 25 percent of the Freddie Mac conforming loan limit, which is determined under the Federal Home Loan Mortgage Corporation Act. If you feel your VA mortgage may be affected by changes created by the Veterans Benefits Act, contact your lender for more information.

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Fair Housing - I think I may be encountering discrimination in my search for a home. Can the VA help?
Federal law requires lenders who participate in VA home loans to obey Fair Housing Laws. The law prohibits a great many things including refusal to negotiate, false claims that a residence is sold or otherwise unavailable, and discrimination in financing. Chances are you won't be confronted by these problems, but in the event you do experience something you perceive to be in violation of Fair Housing laws, you can report the activity to your local VA office. The local office will investigate your complaint, which you file by filling out VA Form 26-8827, Housing Discrimination Complaint form.

I Can't Find A House - Do I have any alternatives?
Those with VA loan eligibility or pre-approval may, depending on the location, have trouble finding new homes for sale. Fortunately, there are alternatives. In many areas, the VA can offer repossessed homes available for purchase to qualified buyers. You may also wish to inquire about state programs. Much the same as your veteran educational benefits, individual states offer veteran programs independently of the your federal benefits. Contact the VA office in your area to learn what may be available. Every state has different options, you may find just what you are looking for! Don't forget that the qualifications and requirements may also differ from federal guidelines.

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VA Foreclosures - Can I use a VA loan to buy a repo house? Does the VA have any such homes?
It's true, the VA does get control of properties with VA loan foreclosures. VA foreclosures are offered to the public in the same manner as repossessed HUD and USDA Development homes. If you are interested in one of these foreclosed single family houses, check the government website http://www.homesales.gov/ to see what might be available in your area. There are many different agencies offering homes on the website. Eligible buyers should contact a broker to have the Offer to Purchase And Contract of Sale VA form completed and submitted. All the routine eligibility and credit terms apply, as with any housing purchase. Check with your lender if you are unsure of the terms and conditions of purchase.

Improving Credit - How can I help myself before applying for a VA home loan?
Because your VA loan eligibility depends on your debt ratio, it's a good idea to start thinking about fixing your credit long before actually filling out loan paperwork. The best way to help yourself out is to follow the advice of a credit counselor, but you can also take steps on your own to increase your eligibility for a VA home loan. Eliminate as much credit card debt as possible. If you can get yourself down to a single card and stay that way for six months, you will be well on your way to improving your debt ratio and your credit rating. Remember that the maximum debt ratio allowed for approval is 41%, and that your credit rating is also a factor. If you are within a few months of paying off a major debt such as an automobile loan, do so as quickly as possible. You'll most likely need to allow for credit reporting agencies to "catch up" with your newly paid off cards and loans.

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VA Homebuyer's Help? - What sort of advantages or help does the VA offer in the homebuying process?
When applying for a VA home loan there are some advantages to having the VA on your side during the home buying process. Did you know that VA loans offer limitations on closing costs? The VA also offers leniency to qualified VA borrowers who are having temporary financial problems. Other benefits of a VA home loan include long terms of repayment, prepayment rights (with certain guidelines) and under the right conditions, no downpayment required. You are also entitled to get an accurate assessment of the reasonable property value of your proposed purchase. These are just a handful of the added benefits of applying for a VA home loan.

Homebuyer's Help Part 2 - Will the VA give me help if my property is poorly built or defective?
The VA has a great many ways to assist those seeking a VA mortgage, but there are also restrictions. When you purchase a home using a VA home loan, the VA does not offer guarantees that your home is free from defects. While the VA does conduct an appraisal of the property, this should not be misconstrued as an 'inspection' or approval of the condition of the property. The VA does not order builders to correct problems or defects in the construction of your home. It's the buyers responsibility to seek expert advice about the condition of a property before purchase. Additionally, the VA cannot offer legal counsel of any kind. The buyer is responsible for being informed about rights and responsibilities with regard to new property purchases. When in doubt, hire a lawyer or an expert in property evaluation.

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“Farm Loan"? - Can I buy a farm with a VA loan?
A veteran generally cannot get a VA loan to purchase a farm with one notable exception. If the farm has a residence where the veteran intends to live. There is no 'farming requirement' for this kind of purchase, but if the veteran does intend to operate a farm business as a major source of income for loan qualification purposes, it's required to show that the business can turn a profit. There are other options available to veterans who wish to operate a farm. The Farmers Home Administration does show preference to veterans, and can be used as a way to finance veteran-owned farm operations.

Foreign Purchases - Can I purchase outside America?
The VA does not allow veteran mortgages for properties outside the United States. The VA does allow purchases in "American territories and possessions". These areas include Puerto Rico, Virgin Islands, American Samoa , Guam, and the Northern Mariana Islands. If your proposed purchase is in one of these areas, you should be able to apply in the usual ways, but check with your VA rep for any special requirements or conditions based on the laws which cover lending in those territories. (Our company, www.valoans.com, only originates VA home loans for properties in the United States.

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What If I Die Before Paying Off My VA Loan? - What if I die before paying off my VA loan?
Unless mortgage life insurance is purchased, the responsibility of a veteran mortgage passes to the spouse or the veteran's estate in the event of his or her death. There is a continued obligation to make payments, but don't forget the VA's "Leniency Policy" with regard to forbearance for qualified borrowers who fall on temporary hard times. Mortgage life insurance can take care of this issue once and for all, but it is not offered through the VA. You'll need to find a qualified private insurance company to make these arrangements. The terms of such insurance may vary from agency to agency.

Selling My VA Loan Property - Once I sell my property, am I released from my VA loan obligation?
Some people may assume that selling the property purchased with a VA loan releases them from obligation to the VA loan. This is not automatic! The borrower must notify either the VA or the lender and request that liability be transferred to the new owner. The borrower needs to request a 'release from liability" notice from the VA. There is an exception to this policy for those with loans closed before March 1, 1988. In these cases no notification is required, but it is a very good idea to request a release from liability from the VA anyway.

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Mortgage Payments - What happens if my mortgage is sold to another mortgage company?
Chances are you will make payments to different lenders over the course of your VA mortgage. Selling mortgages from lender to lender is common, and sometimes a VA mortgage payment is sent to the old loan holder because notification of the new owner of your loan and your payment became crossed in the mail. If this happens, you may receive a notice of non-payment from the new loan holder. Don't delay in contacting the new owner of your VA mortgage to straighten up the problem. While it is technically up to the two lenders to fix the matter, your credit rating and payment schedule could be affected if you don't act accordingly.

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