Frequently
Asked Questions
General
- Eligibility - Pre-loan
- Construction/Valuation - Post
Loan
General
Questions
-
Can I use my VA loan to buy a rental property?
-
Do I have to take a fixed-rate VA loan?
-
Am I limited in buying an existing home with a VA loan?
-
What can I do if I lost my DD214 form?
-
What happens if I die before paying off my VA loan?
- Will
the VA give me help if my property is has structural problems?
-
What is the maximum loan amount guaranteed by the VA?
- What
happens if I file bankruptcy and want to buy another home in the
future?
- Can
I have a co-signer on my VA home loan?
- Does
the VA Home Loan benefit cover Construction Loans?
- If
I was discharged years ago and want to qualify for a VA loan, what
forms or other documents will I need?
- What
types of repayment options are available?
-
Does a veteran's home loan entitlement expire?
- Reservists
are eligible for VA Loans, too. Who qualifies?
- Can
a veteran get a VA farm loan?
- Can
I build a home with a VA Home Loan?
- Can
you take out a VA loan for a second home or vacation cabin?
- Can
a veteran obtain a VA loan for the purchase of property in a foreign
country?
- What
is a VA-guaranteed manufactured home loan?
- If
a borrower has used a VA loan in the past, can that person be eligible
again?
- 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?
- I
heard the VA has an inventory of foreclosed homes. How can I find
out more about this?
- What
service is not eligible for a VA Home Loan?
-
My husband is 100% disabled. We need a home that is disabled friendly.
Does the VA Have a loan program that will allow us to buy a home,
convert it for the disabled, and have it financed through the loan?
-
We have NO credit. Can we still get a VA Home Loan?
- What
is the $ 36,000 Basic Entitlement about?
1. Can
I use my VA loan to buy a rental property?
The idea of buying
a building intended as a rental property is sound-but VA mortgages
aren't intended for this purpose. If you buy a home with a VA home
loan, you must certify that you intend to "personally" live
in the house. There are naturally exceptions made for houses that
are in the building stages when the sale is made, but the general
rule is you must occupy the house within sixty days of the loan closing.
The occupancy requirement applies to all VA guaranteed loans except
one; the Interest Rate Reduction Refinancing Loan or IRRRL. For these
loans, the veteran is required to certify that the dwelling was previously
occupied as the home.
Furthermore, you
can buy you home as a primary residence and then, afterwards, rent
it out. But you cannot purchase a 2nd home with VA until that 1st
one is paid off.
2. Do
I have to take a fixed-rate VA loan?
Veterans who shop
around will learn it's possible to get a fixed rate loan, negotiated
with the lender of your choice. Another option? The adjustable rate
loan, where interest may be adjusted one percent annually, up to five
percent over the duration of the loan period. Which to choose? No
matter which way you think is best, do your homework, shop around
and get the best rate possible. Some make the mistake of taking the
first offer that sounds fair, but don't be intimidated by the process.
You may be eager to get the "hard part" over with and get
into a home. Take some time to research the biggest purchase of your
life! When in doubt, consult an expert, a legal advisor or a trusted
friend in the real estate business. The more research you do, the
better you'll feel at closing time. The VA is in the business of loan
guaranty, but the choice of which loan to take is strictly up to you.
It's also a good idea to look for businesses who make a habit of cultivating
customers who are veterans--you may find their expertise in VA matters
quite valuable to reduce unnecessary waiting times on paperwork.
3. Am
I limited to buying an existing home with a VA loan?
A VA home loan
has more flexibility than you might think. While many use this benefit
to purchase existing homes, there are many other applications. Did
you know you a VA home loan may be used to purchase and improve a
home at the same time? You may also use a VA loan to improve your
existing home by increasing energy efficiency. There is also a provision
for people to use a VA loan to purchase a manufactured home and lot,
under the right conditions. There are many applications for a VA home
loan, sometimes all you need to do is ask!
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4. What
can I do if I lost my DD214 form?
Those who have
been discharged, separated or retired should keep multiple copies
of the DD214--your discharge paperwork. It's the most important military
document in your records. This is proof of your military status, whether
you are retired, separated, discharged. It also displays the nature
of your discharge, and what your status is with the National Guard
or a Reserve Unit. The lack of a DD214 form can bring some of your
VA processes to a halt, but fortunately you can get a replacement
copy by writing to the National Personnel Records Center. Enclose
a completed form SF-180 along with a letter stating the reason for
your request, you name, rank, social security number. If you are a
recently discharged military member who separated or retired at an
overseas location, remember that your DD214 form may be delayed overseas
for up to a year before it becomes part of the National Record Center
archives. If this is the case, you contact the orderly room, First
Sergeant or Sergeant Major in charge of where you separated or retired
and request a copy directly from your final base.
5. What
happens if I die before paying off my VA loan?
Unless mortgage
life insurance is purchased, the responsibility of a veteran mortgage
passes to the spouse or the veteran's estate in the event of his or
her death. There is a continued obligation to make payments, but don't
forget the VA's "Leniency Policy" with regard to forbearance
for qualified borrowers who fall on temporary hard times. Mortgage
life insurance can take care of this issue once and for all, but it
is not offered through the VA. You'll need to find a qualified private
insurance company to make these arrangements. The terms of such insurance
may vary from agency to agency.
6.
Will the VA give me help if my property is has structural
problems?
The VA has a great
many ways to assist those seeking a VA mortgage, but there are also
restrictions. When you purchase a home using a VA home loan, the VA
does not offer guarantees that your home is free from defects. While
the VA does conduct an appraisal of the property, this should not
be misconstrued as an 'inspection' or approval of the condition of
the property. The VA does not order builders to correct problems or
defects in the construction of your home. It's the buyers responsibility
to seek expert advice about the condition of a property before purchase.
Additionally, the VA cannot offer legal counsel of any kind. The buyer
is responsible for being informed about rights and responsibilities
with regard to new property purchases. When in doubt, hire a lawyer
or an expert in property evaluation.
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7. What
is the maximum loan amount guaranteed by the VA?
The maximum guarantee
authorized by the VA is 25 percent of the loan amount up to $104,250.
The maximum VA home loan is $417,000. The VA maximum loan amount in
the states of HI, CA and AK was increased to the maximum FHLMC. The
limit for those states is $539,475.
8.
What happens if I file bankruptcy and want to buy another
home in the future?
Veterans who file
for bankruptcy are still allowed to use a VA home loan if they are
eligible. Unfortunately the process does require a waiting period.
You are allowed to purchase another home two years after the "discharge
date" of your bankruptcy. Keep in mind that the filing date does
not factor in-you must wait the two years after bankruptcy has been
discharged. Once you are eligible to buy another home, the usual credit
and income requirements apply.
9. Can
I have a co-signer on my VA home loan?
It's true that
the legally married spouse of a military member or veteran can co-sign
a VA loan. There is no "penalty" for doing so, the veteran
loan is still fully guaranteed by the VA. Two unmarried military members
are also able to co-sign on a VA loan with the same results. When
a military member or veteran wants to bring an unrelated, non-military
cosigner, the VA allows this with one major exception. The VA guarantee
is limited to the amount of the veteran's interest in the property.
Some companies won't allow these types of "mixed" loans,
so you may have a bit of shopping around to do before finding a lender
willing to work with you. If you find yourself in this position, give
yourself plenty of extra time to hunt for the right lender.
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10. Does
the VA Home Loan benefit cover Construction Loans?
No, the VA Home
Loan Benefit does NOT offer construction loans. However, once you
build you home, you can convert your construction loan into a VA Home
Loan permanent mortgage. Construction loans are generally best provided
by local lenders and banks in you area. The reason is that they understand
the local market and can deal with general contractors well. That's
an important featured when building a home.
11. 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. If you do not have this Certificate,
you will need to apply using VA Form 26-1880 and this will require
a copy of DD-214 (Certificate of Release or Discharge from Active
Duty) showing character of service. Along with the Certificate of
Eligibility, loan applicants will need to document their credit, savings
and employment information.
12. What
types of repayment options are available?
The guarantees
thirty-year loans with a choice of repayment plans: Traditional fixed
payment (constant principal and interest); Graduated Payment Mortgage,
or GPM (low initial payments which gradually rise to a level payment
starting in the sixth year); and in some areas, Growing Equity Mortgages,
or GEMs (gradually increasing payments with all of the increase applied
to principal, resulting in an early payoff of the loan). There is
no prepayment penalty.
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13. Does
a veteran's home loan entitlement expire?
No. Home loan
entitlement is generally good until used if a person is on active
duty. Once discharged or released from active duty before using an
entitlement, a new determination of their eligibility must be made
based on the length of service and the type of discharge received.
14. 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; 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. Eligibility
for Selected Reservists is due to expire on September 30, 2009.
15. Can
a veteran get a VA farm loan?
No, except for
a farm on which there is a farm residence that will be personally
occupied by the veteran as a home. Other types of farm financing may
be obtained through the Farmers Home Administration.
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16. Can
I build a home with a VA Home Loan?
Yes. But there
are several clauses that may make this difficult to accomplish. Many
veterans use their VA Home Loan Certificate of Eligibility to negotiate
in good faith a private home construction loan and then refinance
the completed home using VA Home Loans.
17. Can
you take out a VA loan for a second home or vacation cabin?
The law requires
that you certify that you intend to occupy the property as your home.
But it specifically provides that occupancy by the veteran's spouse
satisfies the personal occupancy requirement. However, there are no
provisions for other family members. VA Home Loans are available for
a variety of purposes including building, altering, or repairing a
home; refinancing an existing home loan; buying a manufactured home
with or without a lot; buying and improving a manufactured home lot;
and installing a solar heating or cooling system or other weatherization
improvements. You are also allowed to buy income property consisting
of up to four units, provided you occupy one of the units.
18. 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.
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19. What
is a VA-guaranteed manufactured home loan?
A private lender
makes a VA-guaranteed manufactured home loan. The VA will protect
the lender against loss if the veteran or a later owner fails to repay
the loan. The amount VA will guarantee is 40 percent of the loan amount
or the veteran's available entitlement, up to a maximum amount of
$20,000. The guaranty amount is not the same as the amount a veteran
can borrow.
20. 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 is $36,000. 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.
21. 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.
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22. I
heard the VA has an inventory of foreclosed homes. How can I find
out more about this?
The Department
of Veterans Affairs (VA) acquires properties as a result of foreclosures
on VA guaranteed loans. These acquired properties are marketed through
a property management services contract with Ocwen Federal Bank FSB,
West Palm Beach, Florida. Local listing agents through local Multi
Listing Systems (MLS) list the properties. A list of properties for
sale may also be obtained from Ocwen's website at http://www.ocwen.com/.
Or you can check Find
VA Foreclosures
23. What
service is not eligible for a VA Home Loan?
You are not eligible
for VA financing solely based upon service in World War I, Active
Duty Training in the Reserves, or Active Duty Training in the National
Guard. Note: Guard and Reservists are eligible if they were "activated"
under the authority of title 10 U.S. Code as was the case for the
Iraq/Afghanistan.
24. My
husband is 100% disabled. We need a home that is disabled friendly.
Does the VA Have a loan program that will allow us to buy a home,
convert it for the disabled, and have it financed through the loan?
Yes, the VA does
have a loan program where they will allow you to finance the cost
of making a home handicap accessible and friendly.
25. We
have NO credit. Can we still get a VA Home Loan?
Yes, you can.
In fact, having no credit score is OK. Okay, that's not usual today
in our modern credit society but it's OK. So long as you you do not
have a bunch of recent bad credit, a loan can be funded. If you have
0 credit, we get alternative sources for show payment history ie..
letters from landlord, utilities, car, insurance, phone bills etc...
26. What
is the $ 36,000 Basic Entitlement about?
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. To get a loan, a veteran
must apply to a lender. If the loan is approved, VA will guarantee
a portion of it to the lender. This guaranty protects the lender against
loss up to the amount guaranteed and allows a veteran to obtain favorable
financing terms. There is no maximum VA loan but lenders will generally
limit VA loans to $417,000 This is because lenders sell VA loans in
the secondary market, which currently places a $417,000 limit on the
loans. For loans up to this amount, it is usually possible for qualified
veterans to obtain no down payment financing. A veteran's basic entitlement
is $36,000 (or up to $104,250 for certain loans over $144,000). Lenders
will generally loan up to 4 times a veteran's available entitlement
without a down payment, provided the veteran is income and credit
qualified and the property appraises for the asking price.
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-- Equal
Opportunity Lender - Providing VA Home Mortgage Loans to U.S. Military
Veterans