VA PURCHASE LOANS

By using a VA loan to purchase a property, qualified Veterans can borrower up to 100% of the purchase price of a new home, plus closing costs, prepaid expenses, and discount points with no down payment. Not only are these loans offered at historically low interest rates, but also avoid the need to waste money on expensive monthly mortgage insurance premiums typically associated with loans not requiring 20% down payment. Additionally, sellers are allowed to pay closing fees, allowing most Veterans to get into a home without any out of pocket expenses.

What if I’ve used my entitlement on a VA Home Loan Before?

There is no limit on the number of times a veteran can borrow using a VA loan program. This is a life-long benefit that you, as a veteran, earned through your service to our country. Every veteran, or active service member, who meets VA’s eligibility requirements, has something called “entitlement”. This term refers to the amount of money the VA pledges to repay a lender if the borrower defaults. Even if a veteran has used most, or all, of their entitlement to purchase a home previously, it can be restored once the home is repaid or sold.
Veterans who have used a VA loan before may still have remaining entitlement (see chart) to use for another VA loan. A veteran’s maximum entitlement is $144,000, and lenders will generally loan up to four times your available entitlement without a down payment, provided your income and credit qualifications are fine, and the property appraises for the asking price. Lenders may require that a combination of the guaranty entitlement and any cash down payment equal at least 25 percent of the reasonable value or sales price of the property, whichever is less.

What are some of the service qualifications to be eligible for a VA Home Loan?

• Veterans with two years of continuous active-duty and an honorable discharge
• Veterans with six years of service in the Selected Reserves or National Guard and an honorable discharge
• Veterans with 90 days active-duty wartime service and an honorable discharge
• Veterans with 181 days of continuous active-duty during peace times listed below and an honorable discharge:
• July 26, 1947 – June 26, 1950
• February 1, 1955 – August 4, 1964
• May 8, 1975 – August 1, 1990
• The un-remarried surviving spouse of a veteran
• Eligibility determined by Veterans Administration (VA)
• Veteran must have died on active-duty or as a result of service-connected injuries or illness
• VA determines cause of veteran’s death

Do all local lenders offer VA Loans?

Not necessarily. Many lenders who offer VA loans broker them to third party investors. To ensure your lender understands the nuances of VA lending, you should choose a VA-approved lending institution that is approved by the VA as a direct lender. VA direct lenders not only have the knowledge and experience needed to guide you through the VA loan process, but can also directly order your appraisal, order your certificate of eligibility, underwrite your file to VA standards, and complete the entire loan process in house as opposed to relying on third party assistance to help you understand your loan. You should be aware of lenders who simply take your application and forward it to a VA- approved lender or broker the loan to another lender.

What types of loan options are available?

The VA guarantees both fixed- rate mortgages along with Adjustable Rate Mortgages (ARMs). Various terms are available. The interest rate on these loans never changes during the life of the loan. Adjustable Rate Mortgages are also available. The interest rates on adjustable rate mortgages fluctuate with the market. The amount the interest rate can rise each year is usually limited to one or two percentage points per year, but the frequency they adjust can vary. There is no prepayment penalty associated with any of our VA loan products. This allows the Veteran to pay off their existing VA loan at any time without any penalty for early payment.

What is the maximum VA loan?

The VA loan guaranty program does not impose a maximum loan limit. The VA does limit the maximum VA guarantee to $510,400.00 for most counties in 2020, unless you live in a “high cost area” (contact us for details or questions). VA loans in excess of the county loan limit are available. However, the lender may require the veteran to make a down payment in the amount equal to 25% of the difference between the loan amount and the county loan limit. You should ask your VA loan specialist if your loan amount exceeds $510,400. They can easily assist you with your specific situation or questions.

If I was discharged years ago and want to qualify for a VA loan, what forms or other documents will I need?

Everyone is required to obtain a Certificate of Eligibility (COE). If you do not have this Certificate, you can complete form VA Form 26-1880 or provide your VA loan specialist a copy of DD-214 (Certificate of Release or Discharge from Active Duty) showing character of service. This will allow any VA direct lender to use the Automated Certificate of Eligibility (ACE) system to assist you in obtaining your COE. Along with the Certificate of Eligibility, loan applicants will need to document their credit, savings, and employment information.

Does a veteran’s home loan entitlement expire?

No. Home loan entitlement is generally good until used. However, the eligibility of service personnel is only active while you remain on active duty. Once discharged or released from active duty before using an entitlement, a new determination of your eligibility must be made based on the length of service and the type of discharge received.

Reservists are eligible for VA Loans, too. Who qualifies?

Eligibility extends to members who have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and received an honorable discharge or members who continue to serve in the Selected Reserves. Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability. In addition, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible.

Can you take out a VA loan for a second home or vacation cabin?

VA requires that you certify that you intend to occupy the property as your primary residence. But it specifically provides that occupancy by the veteran’s spouse satisfies the personal occupancy requirement. There are no provisions for other family members. It is very important that you consult with your VA loan specialist if you are unsure if a property is eligible for VA financing.

Can a veteran obtain a VA loan for the purchase of property in a foreign country?

No. The property must be located in the United States, its territories, or possessions. The latter consist of Puerto Rico, Guam, Virgin Islands, American Samoa and Northern Mariana Islands.

If a borrower has used a VA loan in the past, can that person be eligible again?

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 allows for a combined loan amounts equal to $510,400 for most counties. Some “high balance counties” have loan limits up to $765,600. 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 if a qualified veteran 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. The entitlement may also be restored one time only, if the veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan.

I am a Veteran who purchased a home with my spouse utilizing my VA eligibility. I am now divorced and my spouse was awarded the home. How do I get my eligibility back?

When the property is awarded to the Veteran’s spouse as a result of the divorce, entitlement cannot be restored unless the spouse refinances the property and / or pays off the VA loan in full, or the ex-spouse is a veteran who substitutes their entitlement. The veteran should call and speak with a VA loan specialist to see if their remaining entitlement would allow them to purchase another home with their VA privileges.

One of our VA purchase specialists would love the opportunity to help you start the pre-approval process today. It’s simple and takes just a few minutes to get started. Not only will this provide you the comfort of knowing that you’ll have a loan that fits your budget, but it will ensure that you’re ready to buy when you find the perfect home. Please call one of our specialists at 1-877-455-4677 or simply click the “apply now” button below and one of our VA Loan specialist wills call you to review your options.