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Frequently Asked Questions About VA Home Loans

Nice two story house for saleQ. 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 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 income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support. The veteran must be a satisfactory credit risk.

The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.

The loan must be for an eligible purpose.

The applicant must be an eligible veteran who has available 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 buy a one to four unit home, a condominium unit in a VA-approved project.
  • To build a home. To simultaneously purchase and improve a home.
  • To improve a home by installing energy-related features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA. These features may be added with the purchase of an existing dwelling or by refinancing a home owned and occupied by the veteran. A loan can be increased up to $3,000 based on documented costs or up to $6,000 if the increase in the mortgage payment is offset by the expected reduction in utility costs. A refinancing loan may not exceed 90 percent of the appraised value plus the costs of the improvements. Check with a lender or VA for details.
  • To refinance an existing home loan up to 90 percent of the VA-established reasonable value or to refinance an existing VA loan to reduce the interest rate.
  • To buy a manufactured home and/or lot.
  • To buy a manufactured home and/or 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 added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay for or provide.
Seller concessions include but are not limited to the following:

• payoff of credit balances or judgments on behalf of the buyer.
• provision for escrowed funds to provide temporary interest rate buydowns, and
• payment of extra points to provide permanent interest rate buydowns
• gifts such as a television set or microwave oven
• prepayment of the buyer’s property taxes and insurance
• payment of the buyer’s VA funding fee

Seller paid concessions do not include:

• payment of points as appropriate to the market, or
• payment of the buyer’s closing costs

Maximum Sales Concession
Any seller concession or combination of concessions which exceeds 4% of the established reasonable value of the property is considered excessive for VA loan purposes.

Do not include normal discount points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the 4% limit.
SOURCE - VA Underwriting Manual