VA Loans


 
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In 1944 President Roosevelt signed into law the Serviceman’s Readjustment Act that provided special benefits to those who serve our country in the military. One of those key benefits is the VA Home Loan Guarantee program. It was designed to help veterans attain the American Dream of home ownership.

The Veterans Administration does not lend money or issue your VA loan. Instead, the VA offers a guaranty on your home loan equal to 25% of the approved loan up to the current year’s maximum. (In 2011 the maximum guaranty amount was $104,250 for a maximum loan of $417,000). Some Virginia County limits go higher than this amount, Click here for details.

Who is eligible for a VA loan?

  • Those currently in the military
  • Those in the Reserves or National Guard
  • Those Honorably discharged from the Military, Reserves, or National Guard
  • Un-remarried surviving spouses of veterans who died in active duty or from service related injuries
EraService DatesMinimum Service
WWII Korean Vietnam9/16/1940 – 7/24/1947
6/27/1950 – 1/31/1955
8/5/75 – 5/7/1975
90 days
Peacetime7/26/1947 – 6/26/1950
2/1/1955 – 8/4/1964
5/8/1975 – 9/7/1980
180 days
Post-Vietnam9/8/1980 – 8/1/19902 years
Persian Gulf8/2/1990 – present2 years or active > 90 days
Regular Military8/2/1990 – present90 days
Reserves / National GuardPast or present6 years or active duty >

The VA Guaranty is protection for the lender in the event of default or foreclosure. The VA guaranty makes your application for a home loan more attractive to the lender and allows you to purchase a home for no money down in most cases. The lender works together with the VA; when the paperwork is filled out and the loan is approved, the mortgage company is the agency that lends you the money and collects your payments.

There are many uses for a VA home loan, including:

  •     Buying a home, condominium, or townhome
  •     Building a new home
  •     Buying and improving a home at the same time
  •     Installing energy-efficient improvements to a home
  •     Refinancing an existing VA loan to get a better interest rate

What do I need to provide to get a VA home loan?

  • Pay stubs for last 30 days or most recent Leave and Earning Statement if you are currently in the military
  • W-2s for the last two years for all borrowers and all employers. If you are self-employed or have any self-employment income you will need 2 years worth of tax returns and a year to date profit and loss statement
  • Original or online bank statements for the last two months
  • A Certificate of Eligibility or completed VA 26-1880 (Determination of Eligibility) is required, but VALoans.com uses the VA Automated Certificate of Eligibility system
  • Discharged or retired veterans need to supply a copy of DD214. Those still serving should furnish proof of current service with a current ID card and current reenlistment paperwork
  • Disabled veterans must complete a VA 26-8937 form and attach a copy of the most recent VA disability award letter
  • If you pay or receive child support, supply divorce decree and proof of timely payments

The VA Loan Funding Fee is required by law and varies according to the type of loan, military service status, and other factors. A first-time VA home loan borrower with a no-money-down loan currently pays an amount equal to 2.15% of the loan amount. This amount is subject to change depending on legislation and other factors.

Some borrowers are exempt from the funding fee:

  • Veterans on VA compensation for service-related disabilities
  • Veterans who would receive compensation for service-related disabilities if they didn’t draw retirement pay

There is a different amount on the upfront funding fee depending upon whether or not this is the Veteran’s first use of his/her Veterans benefit, how much money they are putting down, or whether or not it’s a purchase or refinance loan of an existing VA loan or non-VA loan. The good news is that regardless of the amount, the funding fee can be financed into the loan amount so with many VA loans the Veteran can get into the home with no money down.

  • Paid to VA to Help fund the VA program
  • Amount varies depending on type of VA loan and the veteran’s service type

 

Loan TypeDown Payment EquityRegular MilitaryReserves or National Guard
 10%1.25%1.5%
Purchase5%1.5%1.75%
 2.15%2.4%
Regular Refinancen/a2.152.4%
IRRRLn/a.5%

Surviving spouses of military members who died in service or from service-related Disabilities

Loan TypeDown Payment EquityRegular MilitaryReserves or National Guard
 10%1.25%1.5%
Purchase5%1.5%1.75%
 3.3%
Regular Refinancen/a3.3%
IRRRLn/a.5%

If you have declared bankruptcy, you may still be eligible for a VA home loan. There are many factors that can work in your favor.

  • Chapter 7 bankruptcies more than two years old may not affect your current application
  • Post-bankruptcy credit that shows a history of good credit risk is very helpful
  • Circumstances beyond your control leading to a Chapter 7 bankruptcy are given a more favorable view
  • Chapter 13 bankruptcies require a full year of satisfactory payments and a letter from the Trustee or  Bankruptcy Judge which states the new credit is approved

If you have a foreclosure on your credit record, you will need to furnish a complete history of the foreclosure including the circumstances. Past foreclosure is not an automatic disqualification from getting a new VA home loan, but the same criteria mentioned above for Chapter 7 bankruptcy issues will be applied to your case.

If you have a short sale on your credit report, you may still be eligible for a VA home loan. There are many factors that can work in your favor.

  • Short Sales more than two years old may not affect your current application
  • Post Short Sale credit that shows a history of good credit risk is very helpful
  • Circumstances beyond your control leading to a Short Sale are given a more favorable consideration

You can re-use your VA loan eligibility if you have paid off your current VA loan or if you are going to be selling and paying off the home you currently have your VA eligibility on and want to finance a new one. Likewise if you have refinanced a previous home out of a VA loan and into a non-VA loan you can restore your VA benefits to buy one other home. Your lender will need proof that you are eligible for a new VA loan and will ask you for documentation from your previous loan closings, so make sure you keep all of your closing documents handy and bring them to your loan application if you have used your VA home loan benefit before.

FormDescription
DD – 214Document the veteran receives when he/she is discharged from the regular military
DD – 22Document the veteran receives when he/she is discharged from the national guard
DD – 22Document the veteran receives when he/she is discharged from the selective services – a points statement is also required

If you don’t have this information we can help show you how to get it either through the national military personnel archive database at archives.gov or through a regional VA loan processing center.

For more information concerning VA loans or any other loan program, contact us today for a no obligation discussion.

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