A mortgage loan program established by the United States Department of Veterans Affairs to help veterans and their families obtain home financing. The Department of Veterans Affairs does not directly originate VA loans.                                                                                             

A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required.

…Benefits of Getting A VA Loan

100% financing + seller’s concession of 6%….No private mortgage insurance is required….There is a limitation on buyer closing cost….The loan is assumable subject to the assumer’s credit approval….Seller can pay 4% of your closing cost and even help you pay down your debt in order to lower your debt to income ratio….Interest rate are better than conforming loans and similar to FHA loans but without the PMI.

2012 VA Loan Eligibility Questions…2012 Underwriting Guidelines…2012 VA Loan Funding Fee’s Exemptions…2012 VA Loan Funding Fee Exemptions…2012 VA Loan Closing Costs Exemptions…2012 VA Loan Compliance Inspections…2012 VA Loan Sellers Concessions

Military Service Requirements for VA Loan Eligibility

Note: Applications involving other than honorable discharges will usually require further development by VA.  This is necessary to determine if the service was under other than dishonorable conditions.

Wartime – Service During:

WWII: 9/16/1940 to 7/25/1947…Korean: 6/27/1950 to 1/31/1955…Vietnam: 8/5/1964 to 5/7/1975

You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability.

Peacetime – Service during periods:

7/26/1947 to 6/26/1950…2/1/1955 to 8/4/1964…5/8/1975 to 9/7/1980 (Enlisted)…5/8/1975 to 10/16/1981 (Officer)

You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible if discharged for a service connected disability.

Service after 9/7/1980 (enlisted) or 10/16/1981 (officer)

If you were separated from service which began after these dates, you must have:

Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or

Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensable service-connected disability;

Been discharged with less than 181 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.

Gulf War – Service during period 8/2/1990 to date yet to be determined

If you served on active duty during the Gulf War, you must have:

Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or

Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or

Been discharged with less than 90 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

VA Loan Fees a Borrower Might Pay

When buying a home with a VA mortgage, there are a range of fees and expenses a borrower should expect to pay, and then there are fees that could be paid depending on the type of home loan, the state or housing market that loan is issued in, etc….The VA has some requirements that govern these types of expenses; one good example of that is when a third party renders a service as part of the VA loan. The only amount the borrower may…

Is Now The Time To Apply For A VA Home Loan?

Ever since 2008 and the housing market crisis that started that year, some veterans and currently serving military members have felt leery of applying for a home loan. While it’s true that some choose to buy in spite of housing market woes, those who held back may well be considering 2012 or early 2013 as the time to commit.

Part of that motivation is due to recent headlines like the one published on October 3, 2012 at Money.CNN.com; “Economists: Housing recovery finally here”.

That’s a fairly……VA Loan Fees and the Appraisal Process

The appraisal process for VA home loans seems to be a mystery to many borrowers; there are many frequently asked questions about this critical stage of buying a home using VA loan benefits.

VA appraisals are required by federal regulations; the home you want to buy with a VA loan must meet VA minimum property requirements for safety, structural integrity, and other issues.

Some assume these rules are to protect the borrower from buying a home with shoddy workmanship or one that is located in an area…

Questions about who is eligible for a VA loan and reuse of eligibility for another VA loan

Q: How do I apply for a VA guaranteed loan?

A: You can apply for a VA loan right here Free, or you can always call me direct at (516) 469 6262. Please do not hesitate

Q: How do I get a Certificate of Eligibility?……A: You can obtain information on how to get a Certificate of Eligibility later on this page. A Certificate of Eligibility for Home Loan Benefits, to the Veteran Loan Administration Eligibility Center, along with proof of military service. In some cases it may be possible for VA to establish eligibility without your proof of service. However, to avoid any possible delays, it’s best to provide such evidence.

Q: Can my lender get my Certificate of Eligibility for me?

A: Yes, it’s called Web LGY. Only VA Approved lenders have access to the Web LGY system. This Internet based application can establish eligibility and issue an online Certificate of Eligibility in a matter of seconds. Not all cases can be processed through Web LGY – only those for which VA has sufficient data in our records. However, veterans are encouraged to ask their lenders about this method of obtaining a certificate.

Q: What is acceptable proof of military service?

A: If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost.

If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge from Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A PHOTOCOPY OF DD214 WILL SUFFICE…..DO NOT SUBMIT AN ORIGINAL DOCUMENT.

If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which shows your date of entry on your current active duty period and the duration of any time lost.

If you were discharged from the Selected Reserves or the National Guard, you must include copies of adequate documentation of at least 6 years of honorable service. If you were discharged from the Army or Air Force National Guard, you may submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting, or its equivalent. If you were discharged from the Selected Reserve, you may submit a copy of your latest annual point’s statement and evidence of honorable service. Unfortunately, there is no single form used by the Reserves or National Guard similar to the DD Form 214. It is your responsibility to furnish adequate documentation of at least 6 years of honorable service.

If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented.

Q: How can I obtain proof of military service?

A: Standard Form 180, Request Pertaining to Military Records, is used to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is NOT processed by VA. Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.

Q: I have already obtained one VA loan. Can I get another one?

A: Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send a completed VA Form 26-1880 to our Eligibility Center. To prevent delays in processing, it is also advisable to include evidence that the prior loan has been paid in full and, if applicable, the property disposed of. This evidence can be in the form of a paid-in-full statement from the former lender, or a copy of the HUD-1 settlement statement completed in connection with a sale of the property or refinance of the prior loan.

Q: I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan?

A: In this case the veteran’s eligibility can be restored only if the qualified assumer is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assumer has paid off the VA loan.

Q: My prior VA loan was assumed, the assumer defaulted on the loan, and VA paid a claim to the lender. VA said it wasn’t my fault and waived the debt. Now I need a new VA loan but I am told that my used eligibility cannot be restored. Why?……Or,

Q: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have my used eligibility restored. Why?

A: In either case, although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.

Q: Only a portion of my eligibility is available at this time because my prior loan has not been paid in full even though I don’t own the property anymore. Can I still obtain a VA guaranteed home loan?

A: Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.

Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?……A: The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make application for the home loan benefit as a surviving spouse, contact our Eligibility Center. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death), may obtain a VA guaranteed interest rate reduction refinance loan. For more information, contact our Eligibility Center.

[NOTE: Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit. However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 16, 2003 that are received after December 15, 2004.]

Q: Are the children of a living or deceased veteran eligible for the home loan benefit?

A: No, the children of an eligible veteran are not eligible for the home loan benefit.

VA Loan Fees a Borrower Might Pay

When buying a home with a VA mortgage, there are a range of fees and expenses a borrower should expect to pay, and then there are fees that could be paid depending on the type of home loan, the state or housing market that loan is issued in, etc….The VA has some requirements that govern these types of expenses; one good example of that is when a third party renders a service as part of the VA loan. The only amount the borrower may be charged for such services is the actual cost of those services–no surcharges or extra fees can be tacked on by the lender.

Some other types of expenses a borrower should anticipate “just in case” include the following:

Title Examination and Title Insurance

The borrower may be required to pay a fee for title examination and title insurance, if warranted. VA loan rules explain this in VA Pamphlet 26-7, Chapter Eight.

Mortgage Electronic Registration System (MERS) Fee

VA loan rules state, “The veteran may pay a fee for MERS.  MERS is a one-time fee for the purpose of electronically tracking the ownership of the beneficial interest in a loan and its servicing rights.”

Special Mailing Fees for Refinancing Loans

For refinancing loans only, VA loan rules permit the borrower to be charged for costs associated with using Federal Express, Express Mail, or a similar service, “when the saved per diem interest cost to the veteran will exceed the cost of the special handling.”

“Other” Fees Authorized By the Department of Veterans Affairs

VA loan rules for “other” or “additional” fees are addressed in Chapter Eight of VA Pamphlet 26-7, which states clearly, “Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may submit a written request to the Regional Loan Center for approval if the fee is normally paid by the borrower in a particular jurisdiction and considered reasonable and customary in the jurisdiction.”

The phrase “reasonable and customary” is key in that paragraph. While that may be open to interpretation, the VA has the final say when it comes to that interpretation as it applies to the rules in Chapter eight.

Is Now The Time To Apply For A VA Home Loan?

Ever since 2008 and the housing market crisis that started that year, some veterans and currently serving military members have felt leery of applying for a home loan. While it’s true that some choose to buy in spite of housing market woes, those who held back may well be considering 2012 or early 2013 as the time to commit.

Part of that motivation is due to recent headlines like the one published on October 3, 2012 at Money.CNN.com; “Economists: Housing recovery finally here”.

That’s a fairly bold headline–and one that might push some doubters into giving the market another chance. Consider the article’s opening line. “It’s been a long time coming, but economists surveyed by CNNMoney believe the nation’s housing market has finally turned the corner.”

That article goes on to say that fourteen economists were surveyed about home prices, with nine respondents indicating they feel home prices have either started trending upwards or will do so in 2013. Three months prior to that survey, fifty percent of the economists polled by CNN Money stated a turnaround in home prices was likely in 2013.

There are other indicators that the time to consider a VA home loan is now–there have been three months of improvements in the numbers on the S&P/Case-Shiller home price index, plus, as CNN Money reports, “a pick-up in sales of existing homes and home construction and a big jump in the price of new home sales.”

Qualified VA borrowers currently have very low interest rate options open to them, and with house prices beginning to rise once more, there is a good opportunity for borrowers–depending on the housing market–to find competitive prices on new purchase homes, short sales, and even VA loan assumptions.

If you’re considering a VA loan for the end of 2012 or early 2013, it’s a very good idea to pre-qualify for a VA loan amount, discuss your options with a loan officer, and start planning for a look at your favorite neighborhoods for a new home.

VA Loan Fees and the Appraisal Process

The appraisal process for VA home loans seems to be a mystery to many borrowers; there are many frequently asked questions about this critical stage of buying a home using VA loan benefits.

VA appraisals are required by federal regulations; the home you want to buy with a VA loan must meet VA minimum property requirements for safety, structural integrity, and other issues.

Some assume these rules are to protect the borrower from buying a home with shoddy workmanship or one that is located in an area unsuitable due to high risk of natural disasters or other problems. But there is another reason for the detailed rules that govern VA appraisals; when it comes time for the VA borrower to sell the home later down the line (assuming he or she chooses to do so); the sale of that home is not tarnished by such conditions as pointed out in the VA rulebook as being unacceptable.

In other words, the VA appraisal protects the buyer at purchase time, but also when it’s time to put the home up for sale.

The VA appraisal costs money–the borrower is responsible for paying the VA appraiser’s fee, which varies depending on the housing market and state. There is no one set fee for VA appraisal work; only what is considered “reasonable and customary” in that housing market.

Another area that confuses some borrowers–the need to pay for any required compliance inspection. When a VA fee appraiser does the job at a specific home and finds things which require correction, repair, or other attention in order for the VA loan to be approved, there may be a compliance inspection required in order to make sure those repairs actually get done, and to the satisfaction of the VA.

Compliance inspections must also be paid for by the borrower–it’s an expense that should be considered a typical part of buying a home. Sometimes they are needed, sometimes they are not. But a VA loan applicant should always budget for such things just in case–don’t be caught unprepared for the expense should it be required.

Finally, it should be noted that appraisal fees and compliance inspection fees are issued for services rendered–NOT for the results of those services. The borrower does not pay for a positive outcome in either case–just that the work gets done and a determination is made. It’s the service, not the outcome that is being paid for.

VA Loan 2012 Underwriting Guidelines for New VA Loan Home Purchase

No down payment is required by VA unless the purchase price exceeds the reasonable value of the property. The VA Loan lender may require a down payment if necessary to meet secondary market requirements if the home is being purchased above the value given by the VA Loan Appraiser.

The veteran must certify that he or she intends to personally occupy the property as his or her home.

Interest rate and points are negotiated between the VA approved VA Loan Lender and veteran.

The veteran and seller may negotiate for the seller to pay all or some of the points….Points must be reasonable and must be approved by the Veterans Administration.

Points may not be financed in the loan except with Interest Rate Reduction Refinancing Loans (IRRRLs)….Flexible VA Loan standards. The veteran must have:

Satisfactory credit, and…Satisfactory repayment ability…Stable income…Residual income (net effective income minus monthly shelter expense) in accordance with regional tables, and

Acceptable ratio of total monthly debt payments to gross monthly income (A ratio in excess of 41% requires closer scrutiny and compensating factors.).

2012 VA Loan Funding Fee’s

The veteran must pay a funding fee to help defray costs of the VA home loan program….The VA home loan program involves a veteran’s benefit.VA policy has evolved around the objective of helping the veteran to use his or her home loan benefit. Therefore, VA regulations limit the fees that the veteran can pay to obtain a loan….Lenders must strictly adhere to the limitations on borrower-paid fees and charges when making VA loans….In order to defray the cost of administering the VA home loan program, each veteran must pay a funding fee to VA at loan closing….Congress may periodically change the funding fee rates to reflect changes in the cost of administering the program, or to assist a certain class of veterans

…Purchase and Construction Loans

Note: The funding fee for ALL subsequent use loans closed on or after October 1, 2006, and before October 1, 2007, is 3.35 percent. This applies to all purchase loans where no down payment of 5 percent or more is made as well as cash-out refinances where the fee would have been 3.3 percent. Effective October 1, 2007, the subsequent use fee reverts back to 3.3 percent….

…Cash-Out Refinancing Loans…

…Type of Veteran Down payment Percentage for First time Use Percentage for Subsequent Use
Regular…Military None…5% or more (up to 10%)…10% or more 2.15%…1.50%…1.25% 3.3% *…1.50%…1.25%
Reserves/…National Guard None…5% or more (up to 10%)…10% or more 2.4%…1.75%…1.5% 3.3% *…1.75%…1.5%

…*The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan….

…Type of Veteran Percentage for First Time Use Percentage for Subsequent Use
Regular Military 2.15% 3.3%*
Reserves/National Guard 2.4% 3.3%*

…Lenders must remit the VA funding fee via the VA Funding Fee Payment System (FFPS); within…15 calendar days of loan closing.

Lenders paying the fee more than 15 days after loan closing will automatically be assessed a four percent late fee. Fees paid more than 30 days late will automatically be assessed an interest charge in addition to the late fee.

2012 VA Loan Funding Fee Exemptions

The following persons are exempt from paying the VA Loan 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….Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating….Veterans entitled to receive compensation, but who are not presently in receipt because they are on active duty.

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).

A VA Loan lender must:

Verify the status of any veteran who may be exempt from paying the funding fee;…Determine the amount of funding fee owed by any non-exempt borrower;…Collect the appropriate fee from all non-exempt borrowers at loan closing;…Electronically remit the funds to VA in a timely manner through the VA Funding Fee Payment System (FFPS);…Print proof of payment of the funding fee; and…Submit proof that the funding fee has been paid or that the veteran is exempt from paying the funding fee to VA with the closed loan package.

Note: The funding fee may be paid from loan proceeds or cash from borrower.

The lender must verify exempt status by obtaining one of the following:

A properly completed and signed VA Form 26-8937, Verification of VA Benefits, indicating the borrower’s exempt status,…For a veteran who elected service retirement pay instead of VA compensation, a copy of the original VA notification of disability rating and documentation of the veteran’s service retirement income, or…Indications on the Certificate of Eligibility (COE) that the borrower is entitled as an unmarried surviving spouse.

If the veteran’s exempt status cannot be verified prior to loan closing, the funding fee must be remitted as if the borrower was not exempt.

Indicate in the closing package that the veteran claims exempt status. VA will determine the borrower’s status and refund the funding fee if appropriate. If the veteran has a pending disability compensation claim at the time of loan closing, the funding fee must be remitted as if the borrower was not exempt.

Advise the veteran to contact the VA RLC to request a refund if it is later determined that the veteran is entitled to compensation retroactively to a date prior to loan closing.

2012 VA Loan Closing Costs Exemptions (Closing Costs a VA Loan Can NOT Be Charged)……The VA home loan program involves a veteran’s benefit. VA policy has evolved around the objective of helping the veteran to use his or her home loan benefit. Therefore, VA regulations limit the fees that the veteran can pay to obtain a loan.

VA Loan Lenders must strictly adhere to the limitations on borrower-paid fees and charges when making VA loans which are why so many Veterans and Active Duty Service Members are “steered” away from a VA Loan and told that any “Civilian loan” is better.

The approved VA Loan lender’s maximum allowable flat charge of one percent of the loan amount (or greater percentage in the case of construction loans) is intended to cover all of the lender’s costs and services which are not reimbursable as “itemized fees and charges.” The lender may pay third parties for services or do as it wishes with the funds from the flat charge, as long as the lender complies with the Real Estate Settlement Procedures Act (RESPA).

The lender may not charge the borrower for attorney’s fees. However, reasonable fees for title examination work and title insurance can be paid by the borrower. They are allowable itemized fees and charges.

VA does not intend to prevent the veteran from seeking independent legal representation. Therefore, the veteran can independently retain an attorney and pay a fee for legal services in connection with the purchase of a home. Closing documents should clearly indicate that the attorney’s fee is not being charged by the lender, but is being paid by the veteran as part of an independent arrangement with an attorney.

Fees or commissions charged by a real estate agent or broker in connection with a VA loan may not be charged to or paid by the veteran-purchaser.

While use of “buyer” brokers is not precluded, veteran-purchasers may not, under any circumstances, be charged a brokerage fee or commission in connection with the services of such individuals. Since information on property available for purchase and financing options is widely available to the public from a variety of sources, VA does not believe that preventing the veteran from paying buyer-broker fees will harm the veteran.

A veteran obtaining a VA refinancing loan cannot use loan proceeds to pay penalty costs for prepayment of an existing lien.

A veteran purchasing a property with a VA loan cannot pay penalty costs required to discharge any existing liens on the seller’s property.

In proposed construction cases in which the dwelling was constructed under the Department of Housing and Urban Development (HUD) supervision, the cost of any inspections or re-inspections must be borne by the builder or sponsor and are not chargeable to the veteran-purchaser. This includes:

Re-inspections by VA or HUD of onsite or offsite work for which an escrow agreement was established, and any additional re-inspections deemed necessary by VA to assure conformity with VA regulations.

The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges.” If it IS a VA Loan, “Civilian” Loans like Conventional and FHA Loans you WILL be charged. Instead, the lender must cover any cost of these items out of its flat fee:

Loan Closing Lender Fees

Lender Document Preparation Fees

Conveyance fees

Attorney’s 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

Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser

Trustee’s fees or charges

Loan application or processing fees

Fees for preparation of truth in lending disclosure statement

Fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and tax service fees.

Appraisals and Veterans Administrations Compliance Inspections

The veteran MUST pay the fee of a VA appraiser and VA compliance inspectors….The veteran can also may have to pay for a second appraisal if he or she is requesting reconsideration of value.

The veteran cannot pay for appraisals requested by parties other than the veteran or an approved VA Loan Lender

2012 VA Loan Sellers Concessions

For the purposes of this topic, a seller concession is anything of value added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide.

Seller concessions include, but are not limited to, the following:

Payment of the buyer’s VA funding fee…Prepayment of the buyer’s property taxes and insurance…Gifts such as a television set or microwave oven…Payments of extra points to provide permanent interest rate buy downs…Provision of escrowed funds to provide temporary interest rate buy downs, and…Payoff of credit balances or judgments on behalf of the buyer.

Seller concessions do not include payment of the buyer’s closing costs or payment of points as appropriate to the market.

Example:  If the market dictates an interest rate of 7½ percent with two discount points, the seller’s payment of the two points would not be a seller concession.  If the seller paid five points, three of these points would be considered a seller concession.

In some localities, builders or sellers offer concessions as a competitive tool.  In extreme cases, the concessions may entice unwary and unqualified veterans into home mortgages they cannot afford.  The concessions may disguise the veteran’s inability to qualify for the loan.

Any seller concession or combination of concessions which exceeds four percent of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.

Do not include normal discount points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the four percent limit.

Purchase & Cash-Out Refinance Home Loans

With a Purchase Loan, VA can help you purchase a home at a competitive interest rate, and if you have found it difficult to find other financing.

VA’s Cash-Out Refinance Loan is for homeowners who want to take cash out of your home equity to take care of concerns like paying off debt, funding school, or making home improvements. The Cash-Out Refinance Loan can also be used to refinance a non-VA loan into a VA loan. VA will guaranty loans up to 100% of the value of your home.

About the VA Home Loan Guaranty

Most VA Home Loans are handled entirely by private lenders and VA rarely gets involved in the loan approval process. VA “stands behind” the loan by guaranteeing a portion of it. If something goes wrong and you can’t make the payments anymore, the lending institution can come to us to cover any losses they might incur. The VA loan guaranty is the “insurance” that we provide the lender.

VA Home Loan Advantages

The guarantee VA provides to lenders allows them to provide you with more favorable terms, including:

  • No down payment as long as the sales price doesn’t exceed the appraised value.
  • No private mortgage insurance premium requirement.
  • VA rules limit the amount you can be charged for closing costs.
  • Closing costs may be paid by the seller.
  • The lender can’t charge you a penalty fee if you pay the loan off early.
  • VA may be able to provide you some assistance if you run into difficulty making payments.

You should also know that:

  • You don’t have to be a first-time homebuyer.
  • You can reuse the benefit.
  • VA-backed loans are assumable, as long as the person assuming the loan qualifies.

Eligibility   

You must have suitable credit, sufficient income, and a valid Certificate of Eligibility (COE) to be eligible for a VA-guaranteed home loan. The home must be for your own personal occupancy. The eligibility requirements to obtain a COE are listed below for Servicemembers and Veterans, spouses, and other eligible beneficiaries.

VA home loans can be used to:

  • Buy a home, a condominium unit in a VA-approved project
  • Build a home
  • Simultaneously purchase and improve a home
  • Improve a home by installing energy-related features or making energy efficient improvements
  • Buy a manufactured home and/or lot.

Eligibility Requirements for VA Home Loans

Servicemembers and Veterans

To obtain a COE, you must have been discharged under conditions other than dishonorable and meet the service requirements below:

…Type of Loan Percentage for Either Type of Veteran Whether First Time or Subsequent Use
IRRRLs .50%
Manufactured Home Loans (NOT permanently affixed) 1.00%
Loan Assumptions .50%

*If you do not meet the minimum service requirements, you may still be eligible if you were discharged due to (1) hardship, (2) the convenience of the government, (3) reduction-in-force, (4) certain medical conditions, or (5) a service-connected disability.

Spouses

The spouse of a Veteran can also apply for home loan eligibility under one of the following conditions:

  • Unremarried spouse of a Veteran who died while in service or from a service connected disability, or
  • Spouse of a Servicemember missing in action or a prisoner of war
  • Surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003…(Note: a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must have applied no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.)
  • Surviving Spouses of certain totally disabled veterans whose disability may not have been the cause of death

Other Eligible Beneficiaries

You may also apply for eligibility if you fall into one of the following categories:

  • Certain U.S. citizens who served in the armed forces of a government allied with the United States in World War II
  • Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with World War II service, and others

Restoration of Entitlement

Veterans can have previously-used entitlement “restored” to purchase another home with a VA loan if:

  • The property purchased with the prior VA loan has been sold and the loan paid in full, or
  • A qualified Veteran-transferee (buyer) agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the Veteran seller. The entitlement may also be restored one time only if the Veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan. Remaining entitlement and restoration of entitlement can be requested through the VA Eligibility Center by completing VA Form 26-1880.
  • Buying Process
  • In most cases, you need to follow these steps to get a VA home loan.
  • Eligibility Requirements for VA Home Loans
  • Find a real estate professional to work with. Perhaps a friend has someone to recommend. Or you could look under “Real Estate” in your yellow pages or on the web.
  • Find a Lender
  • Locate a lending institution that participates in the VA program. You may want to get “pre-qualified” at this point – that is, find out how big a loan you can afford. Lenders set their own interest rates, discount points, and closing points, so you may want to shop around.
  • Get a Certificate of Eligibility
  • The Certificate of Eligibility (COE) verifies to the lender that you meet the eligibility requirements for a VA loan. Learn more about the evidence you submit and how to apply for a COE on our Eligibility page.
  • Find a Home and Sign a Purchase Agreement
  • Work with a real estate professional and negotiate a purchase agreement. Make sure the purchase and sales agreement contains a “VA Option Clause.”
  • Here’s a sample of a “VA Option Clause”:
  • “It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs.”
  • You may also want the purchase agreement to allow you to “escape” from the contract without penalty if you can’t get a VA loan.
  • Apply for your VA Loan
  • Work with the lender to complete a loan application and gather the needed documents, such as pay stubs and bank statements.
  • Loan Processing
  • The lender orders a VA appraisal and begins to “process” all the credit and income information.
  • (Note: VA’s appraisal is not a home inspection or a guaranty of value. It’s just an estimate of the market value on the date of the inspection. Although the appraiser does look for obviously needed repairs, VA doesn’t guarantee the condition of the house. The appraiser, who is licensed, is not a VA employee. The lender can’t request a specific appraiser; assignments are made on a rotating basis.)
  • The lending institution reviews the appraisal and all the documentation of credit, income, and assets. The lender then decides whether the loan should be granted.

Loan Limits

VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.

The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to 4 times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price.

Interest rates are subject to change due to market fluctuations. VA evaluates these market trends and determines if interest rate reductions or increases are warranted. If you need to know the interest rate for the Native American Direct Loan program, please click on this link

VA county loan limit:

Remaining Entitlement

Veterans who had a VA loan before may still have “remaining entitlement” to use for another VA loan. Most lenders require that a combination of the guaranty entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property, whichever is less. Thus, for example, $23,500 remaining entitlement would probably meet a lender’s minimum guaranty requirement for a no-down payment loan to buy a property valued at and selling for $94,000. You could also combine a down payment with the remaining entitlement for a larger loan amount.

Interest Rate Reduction Refinance Loan

The VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA home loan. By obtaining a lower interest rate, your monthly mortgage payment should decrease. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.

IRRRL Facts

  • No appraisal or credit underwriting package is required when applying for an IRRRL.
  • An IRRRL may be done with “no money out of pocket” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
  • When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
  • No lender is required to give you an IRRRL, however, any VA lender of your choosing may process your application for an IRRRL.
  • Veterans are strongly urged to contact several lenders because terms may vary.
  • You may NOT receive any cash from the loan proceeds.

Eligibility

An IRRRL can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse the entitlement you originally used…….Additionally:

  • A Certificate of Eligibility (COE) is not required. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.
  • No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.
  • You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.
  • The occupancy requirement for an IRRRL is different from other VA loans. For an IRRRL you need only certify that you previously occupied the home.

Application Process

A new Certificate of Eligibility (COE) is not required. You may take your Certificate of Eligibility to show the prior use of your entitlement or your lender may use our e-mail confirmation procedure in lieu of a certificate of eligibility.

Loan Limits

VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.

The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to four times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price. See Loan Limits for more information about the limits in your county.

VA Funding Fee

Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a:

  • Veteran receiving VA compensation for a service-connected disability, OR
  • Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
  • Surviving spouse of a Veteran who died in service or from a service-connected disability.

The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage. See Loan Fees for more information about loan costs. Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years. While this can save you money in interest over the life of the loan, you may see a very large increase in your monthly payment if the reduction in the interest rate is not at least one percent (two percent is better). Beware: It could be a bigger increase than you can afford.

Appraisers/Staff Appraisal Reviewer

VA fee appraisers determine the reasonable or market value of a property for VA home loan guaranty purposes. The links below are provided as resources for VA fee appraisers.

Appraiser Resources

  • Click on a particular State and it will take you to the supporting Regional Loan Center, where you can obtain maximum allowable fees for the appraisal type and the number of days allowed for completion.
  • By leaving your mouse cursor on a state, without clicking, you will see all of the states supported by that particular Regional Loan Center.

Construction and Valuation

This page contains supplemental information and guidance from the Construction and Valuation Section (C&V) on VA Loan Guaranty Program property requirements and appraisal issues.


Lenders: Submit your question to a C&V representative at the VA Central Office. Please include in the subject line “General Question”. Questions will generally be answered in 4 business days.


Appraiser and Inspector Qualification Requirements

Appraiser and Inspector Fee Panel Application: To be completed and submitted by qualified applicants for VA Appraiser or Construction Inspector. (Please see Qualification Requirements above)

Note: Applications for Construction Inspectors are presently only being accepted for inspectors of Specially Adapted Housing (SAH) properties.

  • The Fee Panel Application form is an easy to use, fillable Adobe Acrobat PDF file. Once completed, the application is routed to the specific Regional Loan Center (RLC) having jurisdiction over the geographic area where you wish to be considered.
  • Each RLC processes its own applications. If you wish to be considered in geographic areas serviced by multiple RLC’s, separate applications must be submitted.
  • Note for appraisal applicants only: On block 18 of the application form, at least two of the three letters attesting to your qualifications must be from other appraisers.

Builder Registration: To sell properties with VA financing, builder’s must possess a valid VA builder ID number, which is issued when the required builder information is received and registered with VA.

Registered Builders, Condominiums: Lists of VA Registered Builders and VA approved and unapproved Condominiums and/or PUDs across the US.

Appraisal Fees and Timeliness: A list by state, which shows appraisal fees and timeliness schedules, specific to a locality.

Local VA Requirements: A list by state, which shows local VA requirements, specific to a locality, which are in addition to the nationwide requirements.

We are pleased to announce our new Staff Appraisal Reviewer (SAR) Information page.

Status Qualifying Wartime & Peacetime Periods Qualifying Active Duty Dates Minimum Active Duty Service Requirement
Veteran WWII 9/16/1940 – 7/25/1947 90 total days
Post-WWII 7/26/1947 – 6/26/1950 181 continuous days
Korean War 6/27/1950 – 1/31/1955 90 total days
Post-Korean War 2/1/1955 – 8/4/1964 181 continuous days
Vietnam War 8/5/1964 – 5/7/1975 *For Veterans who served in the Republic of Vietnam, the beginning date is 2/28/1961 90 total days
Post-Vietnam War 5/8/1975 – 9/7/1980 *The ending date for officers is 10/16/1981 181 continuous days
24-month rule 9/8/1980 – 8/1/1990 *The beginning date for officers is 10/17/1981
  • 24 continuous months, OR
  • The full period (at least 181 days) for which you were called or ordered to active duty
Gulf War 8/2/1990 – Present
  • 24 continuous months, OR
  • The full period (at least 90 days) for which you were called or ordered to active duty
Currently On Active Duty Any Any 90 continuous days
National Guard & Reserve Member Gulf War 8/2/1990 – Present 90 days of active service
  • Six years of service in the Selected Reserve or National Guard, AND
  • Were discharged honorably, OR
  • Were placed on the retired list, OR
  • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable, OR
  • Continue to serve in the Selected Reserve