Veterans Benefits & Services

What are the benefits of a VA home loan?

• Equal Opportunity
• No down payment (unless required by the lender or the purchase price is more than the reasonable value of the property).
• Buyer informed of reasonable value.
• Negotiable interest rate.
• Ability to finance the VA funding fee (plus reduced funding fees with a down payment of at least 5% and exemption for veterans receiving VA compensation).
• Closing costs are comparable with other financing types (and may be lower).
• No mortgage insurance premiums.
• Assumable mortgage.
• Right to prepay without penalty.
• For homes inspected by VA during construction, a warranty from builder and assistance from VA to obtain cooperation of builder.
• VA assistance to veteran borrowers in default due to temporary financial difficulty.

How do I obtain a VA home loan?

1. Select a home and discuss the purchase with the seller or selling agent, sign a purchase contract conditioned on approval of your VA home loan.
2. Contact Veteran's Mortgage & present them with your Certificate of Eligibility or statement of service and complete a loan application.
3. Veteran's Mortgage Company will develop all credit and income information. They will also request VA to assign a licensed appraiser to determine the reasonable value for the property. A certificate of Reasonable Value will be issued. Note: You may be required to pay for the credit report and appraisal unless the seller agrees to pay.
4. Veteran's Mortgage Company will let you know the decision on the loan. You should be approved if the established value and your credit and income are acceptable.
5. Veteran (and spouse) attend the loan closing. Veteran's Mortgage Company or closing attorney will explain the loan terms and requirements as well as where and who to make the monthly payments. Sign the note, mortgage and other related papers.
6. The loan is sent to VA for guaranty. Your Certificate of Eligibility is annotated to reflect the use of entitlement and returned to you.

How do I get a Certificate of Eligibility?

You must complete VA form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits and submit it to one of our offices along with acceptable proof of service as described on the instruction page of the form.

What is a VA Guaranteed Home Loan?

VA guaranteed loans are made by private lenders, such as banks, savings and 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.

Does my entitlement guarantee that I will get a home loan?

No. VA cannot compel a lender to make a loan that would violate their lender policies. Lenders must also comply with VA income and credit standards. If a lender is unwilling to make a loan to you, we can only suggest that you try other lenders.

How much is my entitlement?

Your maximum entitlement is $36,000 (or up to $50,750 for certain loans over $144,000). Lenders will generally lend up to 4 times your available entitlement without requiring a down payment, provided your income and credit qualify and the property appraises for the asking price.

Is there a maximum loan limit?

There is no maximum VA loan but lenders will generally limit VA loans to $322,700. This is because lenders sell VA loans in the secondary market, which currently places a $322,700 limit on the loans. For loans up to $322,700, it is usually possible for qualified veterans to obtain no down payment financing.

Is a guaranteed loan a gift?

No, it must be repaid, just as you must repay any money you borrow. If you fail to make payments you agreed to make, you may lose your home through foreclosure.

Can I get a loan for a home outside of the United States?

Unfortunately, the law only allows VA to guarantee loans on property in the United States, its territories, or possessions.

Can I get a VA loan if I have had a bankruptcy in the last few years?

The fact you and/or your spouse have been adjudicated bankrupt does not in itself disqualify you for a VA home loan. The following rules apply:

• If the bankruptcy was discharged more than 2 years ago, it may be disregarded.
   
• If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that you and/or your spouse are a satisfactory credit risk unless both of the following requirements are met:
  
  1.You and/or you spouse have reestablished satisfactory credit and
  
  2.The bankruptcy was caused by circumstances beyond your and /or your spouse's control (such as unemployment, medical bills, etc.)

• If the bankruptcy was discharged within the past 12 months, it will not generally be possible to determine that you and/or your spouse are satisfactory credit risks.

Why do I have to pay a fee for a VA home loan? Since I paid a fee for my First loan, why is there a larger fee for my second loan?

The VA funding fee is required by law. The fee, currently 2 percent on no down payment loans, is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce to cost to taxpayers. The funding fee for second time users who do not make a down payment is 3 percent. The idea for 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. Second time users who make a down payment of at least 5 percent pay a reduced funding fee of 1.5 percent, the same as first time users make the same down payment. For a 10 percent down payment, the fee drops to 1.25 percent. The effect of the funding fee on a veteran's financial situation is minimized since the fee may be financed in the loan.

I want to buy a house with a VA loan. Do I need to occupy the property?

The law required that you certify that you intend to occupy the property as your home. This requirement is considered satisfied if you actually intend to occupy the property as your home and in fact so occupy it when the loan is closed or within a reasonable time.

If a veteran dies before the loan is paid off, will the VA guaranty pay off the balance of the loan?

No. The surviving spouse or other co-borrower must continue to make the payments. If there is no-borrower, the loan becomes the obligation of the veteran's estate. Mortgage life insurance is available but must be purchased from private insurance sources.

I am a single veteran stationed overseas and want to buy a home in my hometown. My friends who are married can do this with their spouse occupying the property in their place, but VA says I can't do this with my parents or other relatives occupying on my behalf. Isn't this discrimination against single veterans?

The law specifically provides that the occupancy by the veteran's spouse satisfies the personal occupancy requirement. The law makes no provision for occupancy by any other relatives as a substitute for personal occupancy by the veteran.