VA Home Loan FAQs

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VA guaranteed loans are made by private lenders, such as banks, savings and 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 fail 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.

Pre-purchase counseling provides information about:

  • The home buying process
  • Key players in the process
  • Debt management

The goal is to create a better informed homebuyer. While the VA does not require such counseling, they strongly recommend it. There is usually no charge for the housing counseling. An excellent online source of information for first time homebuyers is provided by Ginnie Mae.

To locate a housing counseling office, call 800 569-4287 or visit HUD’s website. The Department of Housing and Urban Development (HUD) maintains both the phone number and website.

No, the VA cannot compel a lender to make a loan that would violate their lender policies. Lenders must also comply with VA income and credit standards. If a lender is unwilling to make a loan to you, you can try other lenders.

You can obtain a Certificate of Eligibility from us, because we 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 the VA has sufficient data in its records. However, please feel free to ask us about this method of obtaining your Certificate of Eligibility.

You can also apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880, Request for a Certificate of Eligibility, to the Atlanta Eligibility Center, along with proof of military service. In some cases it may be possible for the VA to establish eligibility without your proof of service. However, to avoid any possible delays, it's best to provide such evidence.

Here are the steps:

  • 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.
  • Present us with your Certificate of Eligibility if available, and complete a loan application. The lender can also obtain a Certificate of Eligibility on your behalf.
  • We will develop all credit and income information. We will also request the VA 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.
  • We 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. Either we or the 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.

There are many benefits to 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.

Guarantee that a home is free of defects. The VA guarantees only the loan. It is your responsibility to assure that you are satisfied with the property being purchased. The VA appraisal is not intended to be an "inspection" of the property. You should seek expert advice (a qualified residential inspection service), as necessary, before legally committing to a purchase agreement.

If you have a home built, the VA cannot compel the builder to correct construction defects although the VA does have the authority to suspend a builder from further participation in the home loan program.

The VA cannot guarantee that you are making a good investment. VA cannot provide you with legal services.

While Radon testing is not required, it is encouraged. For information on Radon and how to test, please read the Environmental Protection Agency guide.

No, it must be repaid... just as you must repay any money you borrow. If you fail to make the payments you agreed to make, you may lose your home through foreclosure.

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

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 spouse’s 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 VA funding fee is required by law. The fee is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. First-time users who make a down payment of at least 5% pay a reduced funding fee of 1.5. For a 10% down payment, the fee drops to 1.25%. The effect of the funding fee on a veteran's financial situation is minimized since the fee may be financed in the loan. National Guard and Reservist veterans pay a slightly higher funding fee percentage.

The funding fee for second-time users who do not make a down payment is slightly higher. The idea of a higher fee for second-time use is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a down payment. Second-time users who make a down payment of at least 5% pay a reduced funding fee of 1.5%, the same as first-time users making the same down payment. For a 10% down payment, the fee drops to 1.25%. The effect of the funding fee on a veteran's financial situation is minimized since the fee may be financed in the loan. National Guard and Reservist veterans pay a slightly higher funding fee percentage.

The law requires that you certify that you intend to occupy the property as your home. This requirement is considered satisfied if you actually intend to occupy the property as your home and in fact so occupy it when the loan is closed or within a reasonable time afterward.

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 non-veteran's part of the loan. Consult lenders to determine whether they would be willing to accept applications 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, non-veteran's portion of the loan. Unlike other loans, the lender must submit joint loans to VA for approval before they 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 non-veteran's income must be adequate to cover the rest.

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.

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