VA Loan Program Frequently Asked Questions

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.

There are many benefits of obtaining a VA Home loan:

• No down payment
• Closing costs are comparable with other financing types (and may be lower).
• No mortgage insurance premiums.
• Equal opportunity.
• No Junk Fee’s.
• Buyer informed of reasonable value.
• 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).
• An assumable mortgage.
• No Prepay Penalty.
• VA assistance to veteran borrowers in default due to temporary financial difficulty.

Here are the steps:

• VA Mortgage Connection.com will go over a brief loan application and will develop all necessary credit, income and asset information. We will let you know the decision on the loan within 24 hours of your application. We will then issue you a Pre-Approval Letter to take to your realtor.

• Select the home you want to purchase and discuss the purchase with the seller or selling agent and your realtor. Sign a purchase contract conditioned on approval of your VA home loan.
• We will also request VA to assign a licensed VA appraiser to determine the reasonable value for the property.
• Your VA Home Loan will be underwritten in accordance with VA and investor guidelines.
• Certificate of Reasonable Value will be issued by the Underwriter based on home values in the area you wish to purchase.
• 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.

It is possible to obtain a Certificate of Eligibility from VA Mortgage Connection.com. We 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 minutes. Not all cases can be processed through ACE - only those for which VA has sufficient data in our records.

Your basic entitlement is $36,000. For loans in excess of $144,000 to purchase or construct a home, additional entitlement up to an amount equal to 25 percent of the VA county loan limit for a single family home may be available. This loan limit can change yearly. VA county loan limits for 2009 are available at this link. The conforming loan limit for 2008 is $417,000 ($625,500 for Hawaii, Alaska, Guam and U.S. Virgin Islands). This means that qualified veterans could get a no down payment purchase loan for those amounts. This can be a very complicated process or made easy by applying here to have our loan specialist assist you.

Unfortunately No, VA cannot require a lender to make a loan that would violate their lending policies. Lenders must also comply with VA guidelines in regards to income and credit standards

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 the Winston-Salem Eligibility Center. 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 loan.

Yes, however, the property must meet the Minimum Property Requirements (MPR’s) established by VA. The appraiser will determine if the property meets these requirements at the time of appraisal and will note and deficiencies (if any) on the appraisal. They repairs must be completed prior to funding your VA Loan.

The law requires that you certify that you intend to occupy the property as your primary residence. This requirement is considered satisfied if you actually intend to occupy the property as your home.

The fact you and/or your spouse have been adjudicated bankrupt does not in itself disqualify you for a VA home loan. The following rules apply:

• If the bankruptcy was discharged more than 2 years ago, it may be disregarded
• If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that you and/or your spouse are a satisfactory credit risk unless both of the following requirements are met:
  • you and/or your spouse have reestablished satisfactory credit, and
  • the bankruptcy was caused by circumstances beyond your and/or your spouses control (such as unemployment, medical bills, etc.)
• If the bankruptcy was discharged within the past 12 months, it will not generally be possible to determine that you and/or your spouse are satisfactory credit risks.

The law specifically provides that occupancy by the veteran's spouse satisfies the personal occupancy requirement. The law makes no provision for occupancy by any other relatives as a substitute for personal occupancy by the veteran.

Yes, but the guaranty is based only on the veteran's portion of the loan. The guaranty cannot cover the nonveteran's part of the loan. Consult one of our Loan Specialist to determine if you qualify for joint loans of this type. Lenders that are willing to make these types of loans will likely require a down payment to cover risk on the unguaranteed, nonveteran's portion of the loan. Unlike other loans, the lender must submit joint loans to VA for approval before theia are made. Both incomes can be used to qualify for the loan. However, the veteran's income must be sufficient to repay at least that portion of the loan related to the veteran's interest in (portion of) the property and the nonveteran's income must be adequate to cover the rest.

Unfortunately No. The surviving spouse or other co-borrower must continue to make the payments. If there is no CO-borrower, the loan becomes the obligation of the veteran's estate. Mortgage life insurance is available but must be purchased from private insurance sources.

A termite inspection is required for most VA mortgages depending on which area in the country you live. Other required inspections are for properties that have a well and or septic system. These are completed by a licensed inspector and will be requested when you go under contract for the property you have chosen.

Although the VA fee appraiser must view the property from both the exterior and interior to determine its overall condition, the appraisal process is not intended to be an "inspection" of the property. While the appraiser is an experienced observer, and is required to recommend needed repairs based upon his or her observations while completing the appraisal, the appraiser is not expected to recommend cosmetic repairs, ensure that mechanical, electrical and plumbing systems work properly, climb on the roof, etc. VA cannot guarantee that all defective conditions will be seen by the appraiser, or that the property will otherwise be satisfactory to the buyer in all respects, and VA has no authority to assist veteran homeowners with the correction of defects in existing homes. VA encourages homebuyers to satisfy themselves that the home they intend to purchase is in a condition that is acceptable to them.

Unfortunately, the law only allows VA to guarantee loans on property in the United States, its territories, or possessions.