VA Loans

For those that qualify, VA loans provide the opportunity to minimize costs and maximize benefits for veterans. Borrowers are able to save time and money, making the loan process easier than ever. Here are some of the advantages of VA loans:

• Requires no money down: With no up-front expenses, this is the most attractive advantage of VA loans. It is nearly impossible to find another lending option that provides borrowers with 100% financing. Most conventional loans require a down payment of at least 5%.
  
• Flexible qualification standards: Eligibility for a VA loan is not determined by your credit score. Credit and income standards are more lenient for veterans. It is estimated that 80% of VA borrowers could not have qualified for a conventional loan.
  
• Competitive interest rates: With a conventional loan, the borrower’s credit score weighs more heavily in determining their interest rate. With a VA loan, there is some interest rate variance between high and low credit scores, but the difference is less significant.
  
• No private mortgage insurance: The VA is responsible for guaranteeing VA loans; therefore no additional insurance is needed. Conventional loan borrowers are required to pay this monthly fee, which can average $100-$200.
  
• VA limits amount of closing costs: The seller is allowed to pay all of your closing costs and concessions up to 6% of the loan amount.
  
• No Pre-Pay penalties: You have the option to refinance or sell your home at any time without having to pay a fee.
  
• Assumable mortgage

Veterans are not automatically qualified to receive a VA Loan. In order to become eligible to receive a VA loan you must first apply for a Certificate of Eligibility (VA Form 26-1880). This can be obtained by applying online at the Department of Veterans Affairs website (http://vip.vba.va.gov) or through your lender.

There are further guidelines used to determine eligibility. If you fall under one of the following requirements you are eligible for a VA loan:

• Active-Duty veterans who served a minimum of 90 consecutive days in wartime
  
• Active-Duty veterans who were discharged during or after WWII, without “dishonorable” status
  
• Peacetime veterans who served 181 consecutive days
  
• Enlisted veterans with service dates after 1980, or officers with service dates after 1981, who have served at least 2 years
  
• Served 6 years in the Selected Reserves or National Guard
  
• Spouse of a deceased veteran (with a service-related death) and has not remarried, or a spouse of a serviceperson missing in action or prisoner of war

Eligibility may also be established for citizens who:

• Served in the armed forces of a government allied with the U.S. in WWII
  
• Served as a member in certain organizations, such as officers in Public Health Service, cadets in U.S. Military, Air Force, or Coast Guard, midshipmen at U.S. Naval Academy, officers in National Oceanic and Atmospheric Administration, and merchant seamen with WWII service

The Department of Veterans Affairs limits the costs associated with accepting a loan for veterans that other buyers may encounter. For example, qualified veterans are exempt from being charged brokerage fees or commission. VA loans are intended to keep additional loan costs at a minimum. Costs typically differ with each individual situation, but there are a few costs you should expect to encounter when obtaining your loan. These may include appraisal fees, credit reports, originating fees, recording fees, title examination and title insurance, survey fees, and taxes.

VA loans can be used to purchase a home, townhouse or condominium, build a home, make energy efficient home improvements, purchase land/lot for a manufactured home, or refinance a previous home loan.

The VA guarantees a maximum of 25% of your home loan with a standard loan limit of $417,000. What if the house you want costs more than the limit?

For veterans who qualify, the VA offers a VA Jumbo Home Loan. The maximum guaranty amount depends on the location of the property. The potential loan maximum for all locations in the U.S. other than Alaska, Hawaii, Guam, and the U.S. Virgin Islands is $1,094, 625. In Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the potential loan maximum is $1,641,937.50. VA Jumbo Home Loans offer the same benefits as standard VA loans; however, the qualifying standards for VA Jumbo Home Loans are generally stricter. Unlike standard VA loans, VA Jumbo Home loans have credit score restrictions and require a down payment. Borrowers are also required to pay the funding fee upfront without the option of having it rolled into the loan.

In order for the spouse to be eligible, the veteran must have died due to being in active duty or later from service-connected causes. If the surviving spouse gets remarried on or after age 57 they are still eligible for the benefits. Also, if the veteran is a POW or MIA the spouse can be eligible but it is a one-time only use. If the spouse qualifies, there is a form attached that needs to be mailed or faxed into the VA to obtain the certificate of eligibility. We cannot obtain the certificate of eligibility for the spouse. Please have them call 888-244-6711 for details on how to submit the form to the VA.

Loan $144,000 or less entitlement is $36,000.
For loans in excess of $144,000 additional entitlement may be available. For loans greater than $144,000 but less than $417,000 the max entitlement is $104,250 but even though the veteran may have this additional entitlement the COE will never reflect the extra entitlement. There will be an asterisk by the word “available” and that is how you tell the extra entitlement.

To calculate max loan amount for VA loans:
Value x .25 = A
A – entitlement = B
Value – B = Max loan amount

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