VA (Veterans Affairs) Home Loans
What is a VA Home Loan?
A VA loan is a $0-down mortgage option issued by private lenders and partially backed, or guaranteed, by the Department of Veterans Affairs (VA). Eligible borrowers can use a VA loan to purchase a property as their primary residence or refinance an existing mortgage. VA helps Servicemembers, Veterans, and eligible surviving spouses become homeowners. As part of their mission to serve you, they provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.
The following individuals do not pay the VA funding fee:
- Veterans receiving VA compensation for a service-connected disability.
- Veterans are entitled to receive VA compensation for a service-connected disability, but receive retirement pay or active service pay.
- Un-remarried surviving spouses of Veterans who died in active service or from a service-connected disability.
- A service member with a proposed memorandum rating from VA, prior to loan closing, is eligible to receive compensation as a result of a pre-discharge claim.
- Service member on active duty who provides, on or before the date of loan closing, evidence of having been awarded the Purple Heart.
The VA Home Loan is often the best home loan product for Veterans. Some benefits include:
- No down payment as long as the sales price is at or below the home’s appraised value (the value set for the home after an expert review of the property)
- No loan limit with full entitlement if you can afford the loan, VA will back loans in all areas of the country, regardless of the home price.
- Competitive terms and interest rates from private banks, mortgage lenders, or credit unions
- No need for private mortgage insurance (PMI) or mortgage insurance premiums (MIP) o PMI is a type of insurance that protects the lender if the borrower ends up not being able to pay the mortgage. It’s usually required on conventional loans if the down payment is less than 20% of the total mortgage amount. o MIP is what the Federal Housing Administration (FHA) requires borrowers to pay to self-insure an FHA loan against future loss. Not having to pay PMI could save a borrower on their monthly mortgage payment. Monthly mortgage insurance is required on all loans.
- Fewer closing costs, which may be paid by the seller, lender, or any other party
- No penalty fee for paying off the loan early
Common Questions and Answers:
Who is eligible for a VA Home Loan?
Active-duty service members and Veterans with discharges other than dishonorable, National Guard and Reserve service members and Veterans with an honorable discharge, certain eligible spouses, and other uniformed service personnel may be eligible for VA home loan guaranty benefits.
Is there a fee to use the VA Home Loan Guaranty?
Yes, but the funding fee can be waived (see list below). To keep the program viable, Congress instituted a program funding fee, which is a percentage of the total loan amount. This user fee varies based on whether the loan is a first-time or subsequent (second, third, etc.) use of the benefit. The funding fee may be paid in cash or included in the loan at closing.
What if I want to buy a home while I still have another VA Home Loan?
While you can buy a home for any loan amount, you must either sell your previous home or understand VA rules on subsequent purchases and remaining entitlement. Those who purchase a subsequent home without selling their previous VA-guaranteed home will continue to follow their county conforming loan limit for the VA loan guaranty. This may mean a down payment on any amount above the loan limit.
What is acceptable proof of military service?
If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost.
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 a VA Form 26-1880, Request for a Certificate of Eligibility: 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 the Atlanta Eligibility Center, 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.
Can my lender get my Certificate of Eligibility for me?
Yes, it’s called Web LGY. Most lenders have access to the Web LGY 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 Web LGY – 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.
I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan?
In this case, the veteran’s eligibility can be restored only if the qualified assumer is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assumer has paid off the VA loan.
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.
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