A VA (Veterans Affairs) loan carries many of the same advantages as an FHA home loan. However, to qualify for this loan, you must be a qualifying veteran, the unmarried widow of a veteran, a Public Health Service Officer, or an active-duty service man. VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms. In most parts of the country, the maximum loan amount for a VA-guaranteed loan is $417,000 without putting any money down; however, with the 2013 VA Loan Limits, borrowers in high-cost counties may be able to purchase homes far exceeding that amount without a down payment. Go to http://www.va.gov for more information on VA loans.
What is a streamline financing for VA loans?
The VA Streamline Refinance is also known as the Interest Rate Reduction Refinance Loan (IRRRL). This provides a way for current VA homeowners to lower their interest rate with little or no out-of-pocket costs. These loans can also be made faster and with less documentation than a typical loan. This is only available to veterans who are refinancing their original VA mortgage and utilized their original eligibility. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.
Basics of IRRRL
- VA does not require an appraisal, any income or employment verifications, no credit report and no termite report, yet the mortgage must have been paid as agreed for the last twelve (12) months and must be up to date at the time of refinancing.
- An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
- When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
- No lender is required to give you an IRRRL, however, any VA lender of your choosing may process your application for an IRRRL.
- Any other liens must be subordinated to the VA loan.
- The veteran cannot receive any cash back.
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?
Once you have all the evidence you need, you can apply for your Certificate of Eligibility (COE) using any of the following options.
Servicemembers, Veterans, and National Guard and Reserve Members
- Apply online: To get your Certificate of Eligibility (COE) online, go to the eBenefits portal.
- Apply through your lender: Most lenders have access to the Web LGY system. This Internet-based application can establish eligibility and issue an online COE in a matter of seconds. Not all cases can be processed through Web LGY - only those for which VA has sufficient data in their records.
- Apply by mail: Use VA Form 26-1880, Request for Certificate of Eligibility.
Spouses can take the VA form 26-1817 to their lender for processing or may mail the 26-1817 and DD214 (if available) to the following address:
VA Loan Eligibility Center
Attn: COE (262)
PO Box 100034
Decatur, GA 30031
How can I obtain proof of military service?
For active duty service member looking to buy property with a VA home loan, a signed statement from your unit commander or a designated representative -- a statement that lists you by name, rank, Social Security number and also the nature of your current active duty service commitment or the length of your current assignment is required.
Veterans and Current or former National Guard or Reserve members also have to show proof of service; in those cases it's simply a matter of submitting a copy of the DD form 214 which acts as proof of service and also shows the nature of the discharge.
I have already obtained one VA loan. Can I get another one?
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 one of our VA Eligibility Centers. 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.
Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make application for the home loan benefit as a surviving spouse, contact us now. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death) may obtain a VA guaranteed interest rate reduction refinance loan. For more information, contact us.
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.
What Is a VA Guaranteed Home Loan?
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.
What is pre-purchase counseling and why is it helpful?
Pre-purchase counseling gives a person information on (1) the process of buying a home, (2) the key players in the home buying process, and (3) debt management. The goal is to create a better-informed homebuyer. While VA does not require such counseling, we strongly recommend it. There is usually no charge for the housing counseling.
To locate a housing counseling office call (800)217-6970 or visit HUDs website at http://portal.hud.gov/hudportal/HUD. The Department of Housing and Urban Development (HUD) maintains both the phone number and website.
How do I obtain a VA Home Loan?
- Select a home and discuss the purchase with the seller or selling agent. Sign a purchase contract conditioned on approval of your VA home loan.
- Select a lender, present them with your Certificate of Eligibility and complete a loan application.
- The lender will develop all credit and income information. They will also request VA to assign a licensed appraiser to determine the reasonable value for the property. A Certificate of Reasonable Value will be issued. Note: You may be required to pay for the credit report and appraisal unless the seller agrees to pay.
- The lender will let you know the decision on the loan. You should be approved if the established value and your credit and income are acceptable.
- 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.
What are the benefits of a VA home loan?
- Equal opportunity.
- No down payment (unless required by the lender or the purchase price is more than the reasonable value of the property).
- Buyer informed of reasonable value.
- Negotiable interest rate.
- 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).
- Closing costs are comparable with other financing types (and may be lower).
- No mortgage insurance premiums.
- An assumable mortgage.
- Right to prepay without penalty.
- For homes inspected by VA during construction, a warranty from builder and assistance from VA to obtain cooperation of builder.
- VA assistance to veteran borrowers in default due to temporary financial difficulty.