Frequently Asked Questions About VA Home-Loans

Man holding a stack of papersQ. Can anyone get a VA loan?
A. Only eligible veterans who meet the VA guidelines can obtain a VA home-loan.

Q. How do I get a VA loan certificate of eligibility?
A. Veteran can obtain a COE by completing VA Form 26-1880, Request for a Certificate of Eligibility, and mailing it, along with proof of military service, to an eligibility center, veterans can obtain the certificate online, or approved lenders may request the certificate of eligibility. See certificate of eligibility

Q. Do I have to be a First Time Home Buyer to get a VA mortgage?
A. The VA loan is available for First Time Home Buyers and vets who have owned a home prior to obtaining a VA home-loan.

Q. How does a VA home-loan work?
A. The first step to a VA mortgage is to obtain your certificate of eligibility. The certificate of eligibility informs the lender that you are eligible for a VA home-loan. The second step is to make a pre-approval application with the VA lender. The VA works through approved lenders to provide VA loans. The lender will review your credit report, your income, your debts,years; and pay stubs  and any other liabilities. After you meet the conditions for a VA mortgage, the lender will suggest a sales price range or if you have a signed sales contract, the lender will take the next step by having the house appraised and will set up the escrow. The Veterans Administration does not provide mortgage loans directly to veterans.

Q. How hard is it to get a VA loan?
A. The VA loan is not much different from any other home-loan.

Q. How many times can I use a VA loan?
A. There is no limit on how many times a veteran can obtain a VA loan. However, the veteran should close out (payoff) any outstanding VA loans in order to obtain the maximum loan amount on the new mortgage.

Q. How much are closing-costs on a VA loan?
A. closing-costs vary from state to state and in some states, the closing-costs can change between counties.

Q. How much is the funding fee for a VA loan?
A. See VA funding fee

Q. How to apply for a VA home-loan?

  1. Seek out a VA approved bank or mortgage broker (see below) and meet with the lender. Provide the loan officer with the following information:
  2. You should have your certificate of eligibility or DD214
  3. The lender will need all W2's for the previous two years; and
  4. pay stubs covering the preceding 4 weeks
  5. Bring your bank statements for the past two months . . . all pages.
  6. Divorce decree and settlement papers, if applicable
  7. Photo ID

Q. How to refinance a VA loan?
A. The VA refinance is similar to the VA purchase. Gather up your paperwork and meet with a VA approved mortgage company or bank.

What are the eligibility requirements for a VA home-loan?

To obtain a VA loan, the law requires that:

The veteran's and spouse's income, if any, must be shown to be steady and adequate to make mortgage payments, cover the costs of house ownership, meet other responsibilities and expenditures, and have enough left over for family support. The veteran must be a good credit risk.

The veteran must occupy or plan to occupy the property as a primary residence within a reasonable time after the loan is closed. The loan must be used for a permissible purpose.

The candidate must be a qualified veteran with mortgage entitlement.
SOURCE - VA Loan Origination Reference Guide

Q. What are the current VA loan rates?
A. See rate chart below

Q. What are the benefits of a VA home-loan?
A. The VA home-loan does not require a down payment and the seller is permitted to pay all allowable closing-costs and prepaid costs up to 4% of the sales price.

Q. What Can A VA Loan Be Used For?

  • To purchase a one- to four-unit house or a condominium unit in a VA-approved property.
  • To build a house.
  • To buy and renovate a house at the same time.
  • To enhance a house by adding energy-related elements such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors, or other energy-efficient modifications authorized by the lender and VA.

    These amenities may be added with the acquisition of an existing house or by refinancing a home owned and inhabited by the veteran.

    A loan may be extended up to $3,000 based on proven expenses, or up to $6,000 if the increase in mortgage payment is covered by the anticipated decrease in energy costs.

    A refinancing loan may not exceed 90% of the assessed value plus the expenses of renovations. For further information, contact a lender or the Veterans Administration.

    To refinance an existing house loan up to 90 percent of the VA-established fair value, or to refinance an existing VA loan to lower the interest rate.

    To purchase a manufactured house and/or a lot.

SOURCE - VA web site

Q. What is a certificate of eligibility for a VA loan?
A. See certificate of eligibility

Q. What is a VA loan funding fee?
A. The funding fee is a percentage of the loan amount. The accumulation of the funding fees from VA loan applicants is used to support the VA home-loan program. The pot of money is there to reimburse lenders who have foreclosed on defaulted VA loans.

Veterans and eligible borrowers do not have to pay the VA funding fee if any of the below descriptions is true:

  • Eligible to receive VA compensation for a service-connected disability, but you’re receiving retirement or active-duty pay instead, or
  • The surviving spouse of a Veteran who died in service or from a service-connected disability, or who was totally disabled, and you're receiving Dependency and Indemnity
  • Receiving VA compensation for a service-connected disability, or
    Compensation (DIC), or
  • A service member with a proposed or memorandum rating, before the loan closing date, saying you're eligible to get compensation because of a pre-discharge claim, or
  • A service member on active duty who before or on the loan closing date provides evidence of having received the Purple Heart

Q. What is the loan limit on a VA loan?
A. There is no maximum loan limit on a VA loan, however, the lender may have a maximum loan limit.

Q. Who qualifies for a VA home-loan?
A. See h

VA loan fees paid by seller

The following information regarding the VA seller assist was obtained from VA home-loans Training Guide.pdf. Presented by Cleveland Regional Loan Center:

A seller concession is anything of value contributed to the transaction by the builder or seller for which the buyer pays nothing extra and for which the seller is not normally expected or obliged to pay or give.

Concessions by the seller may include, but are not limited to:

• settlement of credit balances or judgments on the buyer's behalf; • provision for escrowed money to enable temporary interest-rate buydowns; and • payment of additional points to provide permanent interest-rate buydowns.
• gifts such as a television or a microwave oven
• the buyer's property taxes and insurance are paid in advance.
• the buyer's VA funding fee is paid

Seller paid concessions do not include:

• payment of market-appropriate points, or payment of the buyer's closing expenses

Maximum Sales Concession
Any seller concession or combination of concessions that exceeds 4% of the property's established fair value is deemed excessive for VA loan purposes.

When calculating whether concessions exceed the 4 percent limit, exclude regular discount points and payment of the buyer's closing expenses from total concessions.
SOURCE - VA Underwriting Manual