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A VA (Veterans Affairs) loan carries many of the same advantages as an FHA home loan. However, to qualify for this loan, you must be a qualifying veteran, the unmarried widow of a veteran, a Public Health Service Officer, or an active-duty service man. The maximum loan amount for a VA-guaranteed loan is $240,000. However, if you can make a large down payment, VA is now considering loan amounts above $240,000. Generally, you would need to put down 25% of the value exceeding $240,00, and you cannot exceed conventional loan limits. No down payment is required for most VA loans below $240,000. For more information please consult http://www.va.gov
What is a streamline financing for VA loans?
The VA has created an Interest Rate Reduction Loan program called
the Streamline Refinance. This provides a way for current VA homeowners
to lower their interest rate with little or no out-of-pocket costs.
These loans can also be made faster and with less documentation
than a typical loan. This is only available to veterans who are
refinancing their original VA mortgage and utilized their original
eligibility. "No Cost" Streamlines
Basics of VA streamline finance:
- No assumptions are allowed.
- The veteran cannot receive any cash back.
- VA does not require an appraisal, any income or employment verifications, no credit report and no termite report, yet the mortgage must have been paid as agreed for the last twelve (12) months and must be up to date at the time of refinancing.
- Any other liens must be subordinated to the VA loan.
- This loan can be done with "no out of pocket money" 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.
How do I apply for a VA guaranteed loan?
You can apply for a VA loan with any mortgage lender that participates
in the VA home loan program. At some point, you will need to get
a Certificate of Eligibility from VA to prove to the lender that
you are eligible for a VA loan.
How do I get a Certificate of Eligibility?
Complete an 1880: You can apply for a Certificate of
Eligibility by submitting a completed VA
Form 26-1880, Request For A Certificate of Eligibility
For Home Loan Benefits, to one of the VA
Eligibility Centers, 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.
- ACE (automated certificate of eligibility): It's also
possible to obtain a Certificate of Eligibility from your lender.
Most lenders have access to the ACE (automated certificate of
eligibility) 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 ACE
- 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.
How can I obtain proof of military service?
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. VA does NOT process this request form.
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
I have already obtained one VA loan. Can I get another one?
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 VA a completed VA
Form 26-1880 to one of our VA
Eligibility Centers. 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
Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
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 one of our VA
Eligibility Centers. 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
one of our VA Eligibility Centers.
Are the children of a living or deceased veteran eligible for the home loan benefit?
No, the children of an eligible veteran are not eligible for the
home loan benefit.
What Is a VA Guaranteed Home Loan?
VA guaranteed loans are made by private lenders, such as banks,
savings & loans, or mortgage companies to eligible veterans
for the purchase of a home, which must be for their own personal
occupancy. The guaranty means the lender is protected against loss
if you or a later owner fails to repay the loan. The guaranty replaces
the protection the lender normally receives by requiring a down
payment allowing you to obtain favorable financing terms.
What is pre-purchase counseling and why is it helpful?
Pre-purchase counseling gives a person information on (1) the process of buying a home, (2) the key players in the home buying process, and (3) debt management. The goal is to create a better-informed homebuyer. While VA does not require such counseling, we strongly recommend it. There is usually no charge for the housing counseling.
To locate a housing counseling office call (800)217-6970 or visit
HUDs website at www.hud.gov/offices/hsg/sfh/hcc/hccprof14.php.
The Department of Housing and Urban Development (HUD) maintains
both the phone number and website.
What is a VA maximum loan limit?
There is no maximum VA loan but lenders will generally limit VA loans to $240,000. This is because lenders sell VA loans in the secondary market, which currently places a $240,000 limit on the loans. For loans up to $240,000, it is usually possible for qualified veterans to obtain no down payment financing.
How do I obtain a VA Home Loan?
- 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.
- Select a lender, present them with your Certificate of Eligibility and complete a loan application.
- The lender 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.
- The lender will let you know the decision on the loan. You should be approved if the established value and your credit and income are acceptable.
- You (and spouse) attend the loan closing. The lender or closing attorney will explain the loan terms and requirements as well as where and how to make the monthly payments. Sign the note, mortgage, and other related papers.
- The loan is sent to VA for guaranty. Your Certificate of Eligibility is annotated to reflect the use of entitlement and returned to you.
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.
- An 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.