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| Loans For
Veterans |
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VA fixed rate |
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 As
a benefit to veterans, the Department of Veteran Affairs guarantees
repayment of loans made to veterans with no down payment in
most cases and liberal qualifying guidelines. This makes it
easy for veterans to finance their homes.
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| VA Loan Program Synopsis |
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| Borrowers |
Features |
| Low
Cash To Close |
• Up
to 100% financing
• Seller can pay all closing costs, discount points, with no limit!
• Seller can pay prepaids, funding fee and temporary buy down funds
up to a maximum of 4 points
• No cash reserves required after closing |
| Home
Affordability |
• Single
qualifying ratio
• Alternative income sources must continue only 5 years |
| Easy
Qualification |
• No
cash reserves required after closing
• Liberal qualifying ratio
• Alternative income sources must continue only 5 years |
| Convenience |
• Speed
of Light!"software — application on diskette* |
| Speed |
• VA
loan in house underwriting* |
| Special
Advantage |
• Some
loans are assumable with qualifying |
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Some of the best loans available.
The goal is to make housing affordable and more accessible
for U.S. veterans. Available to veterans, reservists, active-duty
personnel and un-remarried surviving spouses of veterans with
100% entitlement.
The features here are excellent. No down payment. And seriously competitive
interest rates. No application fee and lower closing costs. And no cash reserve
is required for the purchase of an owner-occupied single-family residence.
Administered by the U.S. Department of Veterans
Affairs, but made available through us, these are fixed rate loans. Maximum
loan amounts vary by county and state.
VA loans are available for home buying and, in most states, for refinancing.
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| Why a VA loan? |
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The more you know about our home
loan programs, the more you will realize how little "red tape" there
really is in getting a VA loan. VA loans are often made without
any down payment 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.
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| What is a VA guaranteed loan? |
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National Advantage can more or
place VA loans for you. VA's guaranty on the loan protects
the lender against loss if the payments are not made, and is
intended to encourage lenders to offer veterans loans with
more favorable terms. The amount of guaranty on the loan depends
on the loan amount and whether the veteran used some entitlement
previously. With the current maximum guaranty, a veteran who
hasn't previously used the benefit may be able to obtain a
VA loan up to $203,000, it depends on the borrower's income
level and the appraisal value of the property.
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| VA loans - who is eligible? |
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Almost 30 million veterans and
service personnel are eligible for VA financing. Even though
many of that 30 million have already used their loan benefits,
if may be possible for them to buy homes again with VA financing
using remaining or restored loan entitlement.
Veterans with active duty service, that was not dishonorable, during
World War II and later periods are eligible for VA loan benefits.
World War II (September 16, 1940 to July 25, 1947)
Korean conflict (June 27, 1950 to January 31, 1955)
Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at
least 90 days' service.
Veterans with service only during peacetime periods and active duty
military personnel must have had more than 180 days' active service.
Veterans of enlisted service which began after September 7, 1980,
or officers with service beginning after October 16, 1981, must in most cases
have served at least 2 years.
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Persian Gulf conflict |
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Generally, reservists and National
Guard members who were activated on or after August 2, 1990,
served at least 90 days and were discharged are eligible.
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Selective reserve |
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Members of the Selected Reserve,
including National Guard, who are not otherwise eligible and
who have completed 6 years of service and have been honorably
discharged or have completed 6 years of service and are still
serving may be eligible.
Expanded eligibility for Reserves and National Guard individuals
will expire October 28, 1999. Contact the local VA office to find out what is
needed to establish eligibility. Reservists will pay a slightly high funding
fee than regular veterans.
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| Financing - a good deal for veterans |
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Before arranging for a new mortgage
to finance a home purchase, veterans should consider some of
the advantages of VA home loans:
- Most important consideration, no down payment is required
in most cases.
- Loan maximum may be up to 100 percent of the VA-established
reasonable value of the property. Loan amounts to $240,000.
- No monthly mortgage insurance premium to pay.
- Limitation on buyer's closing costs.
- Thirty year loans with a choice of repayment plans:
- Traditional fixed payment (constant principal
and interest; increases or decreases may be expected
in property taxes and homeowner's insurance coverage);
- Adjustable Rate Mortgage-ARM (lower initial interest
rate may allow qualification for a higher loan
amount. Annual interest rate adjustments is limited
to 1 percent and maximum increase in the interest
rate over the life of the loan is capped at 5 percent).
- Graduated Payment Mortgage-GPM (low initial payments
which gradually rise to a level payment starting
in the sixth year); and
- For most loans for new houses, construction is inspected
at appropriate stages to ensure compliance with the approved
plans, and a 1-year warranty is required from the builder
that the house is built in conformity with the approval
plans and specifications. In those cases where the builder
provides an acceptable 10-year warranty plan, only a
final inspection may be required.
- An assumable mortgage, subject to VA approval of the
assumer's credit.
- No early prepayment penalty.
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| Had a VA loan before? |
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Remaining
Entitlement Veterans who had a VA loan before may still have "remaining
entitlement" to use for another VA loan. The current amount
of entitlement available to each eligible veteran is $36,000.
This was much lower in years past and has been increased over
time by changes in the law. For example, a veteran who obtained
a $25,000 loan in 1974 would have used $12,500 guaranty entitlement,
the maximum then available. Even if that loan is not paid off,
the veteran could use $36,000 to buy another home with VA financing.
An additional $10,000 up to a maximum entitlement of $46,000
is available for loans above $144,000 to purchase or construct
a home.
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, in the example, the
veteran's $23,500 remaining entitlement would probably meet a lender's minimum,
whichever is less. Thus, in the example, the veteran's $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. The veteran could also
combine a down payment with the remaining entitlement for a larger loan amount.
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| Restoration of entitlement |
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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. Remaining entitlement and restoration
of entitlement can be requested.
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| VA Appraisal - Certificate of reasonable
value |
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The CRV (Certificate of Reasonable
Value) is based on an appraiser's estimate of the value of
the property to be purchased. Because the loan amount may not
exceed the CRV, the first step in getting a VA loan is usually
to request an appraisal. The appraiser will send a bill for
his or her services to the requester according to a fee schedule
approved by VA. To simplify things, VA and HUD/FHA (Department
of Housing and Urban Development/Federal Housing Administration)
use the same appraisal forms. Also, if the property was recently
appraised under the HUD procedure, the HUD conditional commitment
can usually be converted easily to a VA CRV.
It is important to recognize that while the VA appraisal estimates
the value of the property, it is not an inspection and does not guarantee that
the house is free of defects. Home buyers should be encouraged to carefully inspect
the property themselves, or to hire a reputable inspection firm to help in this
area. VA guarantees the loan, not the condition of the property.
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| Application |
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The application process for VA
financing is no different from any other type of loan. In fact,
the VA application form is the same as that used for HUD/FHA
and Conventional loans. We'll verify the applicant's income
and assets, and obtain a credit report to see that other obligations
are being paid on time. If all is well and the appraised value
of the property is enough to cover the loan needed, we can,
in most instances, then close the loan under VA's automatic
procedure. Only about 10 percent of VA loan applications have
to be submitted to a VA office for approval before closing.
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| Requirements for loan approval |
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To obtain a VA loan, the law requires
that:
- The applicant must be an eligible veteran who has available
entitlement.
- The loan must be for an eligible purpose.
- The veteran must be a satisfactory credit risk.
- The veteran must occupy of intend to occupy the property
as a home within a reasonable period of time after closing
the loan.
- The income of the veteran and spouse, if any, must
be shown to be stable and sufficient to meet the mortgage
payments, cover the costs of owning a home, take care
of other obligations and expenses, and have enough left
over for family support.
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| Costs of obtaining a VA loan |
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Funding fee
(as of Oct. 1, 1993)
A basic funding fee of 2.00 percent must be paid to VA by all but
certain exempt veterans. A down payment of 5 percent will reduce the fee to 1.50
percent and a 10 percent down payment will reduce it to 1.25 percent.
A funding fee of 2.75 percent must be paid by all eligible Reserve/National
Guard individuals. A down payment of 5 percent or more will reduce the fee to
2.25 percent and a 10 percent down payment will reduce it to 2.00 percent.
The funding fee for loans to refinance an existing VA home loan with
a new VA home loan to lower the existing interest rate is 0.5 percent.
Note: For all VA home loans, the Funding
Fee may be paid in cash or it may be included in the loan.
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| Other closing costs |
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Reasonable closing costs may be
charged by the lender. These costs may not be included in the
loan. The following items may be paid by the veteran purchaser,
the seller, or shared. Closing costs may vary among lenders
and also throughout the nation because of differing local laws
and customs. Here are some of the costs you may be expected
to pay at closing:
- VA Appraisal
- Credit Report
- Loan Origination Fee (usually 1 percent of the loan)
- Discount points
- Title Search and Title Insurance
- Recording Fees
- State and/or Local Transfer Taxes, if applicable
- Survey
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