VA HOME LOANS

Qualifying customers can now apply for a regular VA Loan with $0 down up to the county limit. 

The federal Department of Veterans Affairs (DVA) offers loan programs to individuals qualified by military service or other entitlements. The VA does not make loans, but guarantees loans made by an approved institutional lender, much like the FHA.  As with FHA loans, there are no alienation or prepayment penalty clauses allowed in VA loans.  A lender, such as a mortgage company, S&L, or bank, makes VA loans. The DVA's guaranty on the loan protects the lender against loss if the payments are not made and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of the guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously.

What is a VA Loan?

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 downpayment financing.  A veteran's maximum 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 downpayment, provided the veteran is income and credit qualified and the property appraises for the asking price.

VA Loans Offer the Following:

• Equal opportunity for all qualified veterans to obtain a VA loan.
• No downpayment (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 downpayment 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.

VA Does Not Do the Following:

• Guarantee that a home is free of defects. VA guarantees only the loan. It is the veteran's responsibility to assure that he/she is satisfied with the property being purchased. The VA appraisal is not intended to be an "inspection" of the property. A veteran should seek expert advice (a qualified residential inspection service), as necessary, BEFORE legally committing to a purchase agreement.
• If you have a home built, VA cannot compel the builder to correct construction defects although VA does have the authority to suspend a builder from further participation in the home loan program.
• VA cannot guarantee that a veteran is making a good investment.
• VA cannot provide a veteran with legal services.

How Does a Veteran Obtain a VA Loan?

• Contract to purchase: Veteran selects home and discusses purchase with seller or selling agent and signs purchase contract conditioned on approval of a VA guaranteed loan.
• Loan application: Veteran selects lender, presents Certificate of Eligibility, and completes loan application. Lender will develop all credit information and request VA to assign a licensed appraiser to determine the reasonable value for the property. Veteran will pay for credit report and appraisal unless the seller agrees to pay. Either VA or the lender will issue a value for property for loan purposes based on the appraisal.
• Loan decision: If the established value is acceptable to all parties and the lender develops that a veteran is credit and income qualified, the loan may be approved. Most lenders are authorized to make this decision.
• Loan closing: Veteran (and spouse) attend the loan closing and sign the note, mortgage, and other related papers. The lender or closing attorney will explain the loan terms and requirements as well as where and how to make the monthly payments. When the loan is reported to VA, the Certificate of Eligibility is annotated to reflect the use of entitlement and returned to the applicant. (The loan closing procedure may vary in some states.)

VA Debt to Income Ratios

According to VA guidelines, borrowers and / or their spouse must qualify according to set debt ratios which are used to determine whether the borrower can reasonable be expected to meet the expenses involved with home ownership.

Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, homeowners' dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 41%. In the event the number exceeds the 41%, the VA has a residual income guideline which can allow approval, yet are not considered a compensating factor.

With more than 25.5 million veterans and service personnel eligible for VA financing, this loan is attractive and has many advantages. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

How to have Minimal or Zero Closing Costs

Please note that often times veterans believe that closing costs are covered by a VA mortgage. While that is not technically true, the same effect can be reached through careful structuring of your real estate contract. The loan amount will be the purchase price or appraised value, whichever is less (plus the VA Funding Fee). So if you want your closing costs covered by the loan, you need to increase the price and have a stipulation with the seller will pay the closings costs and pre-paid expenses equal to the amount by which you have increased the price. As long as the home appraises for the increased price, you will have the closing costs paid as part of the deal. Closing costs and pre-paid expenses can vary widely with 3% - 5% as the range for most places.

If you want a more specific number in this regard after you have started looking for properties, we can provide you with a Good Faith Estimate for a particular property that you have an interest.

Take Advantage of the New VA Loan Maximum Limits

Qualifying customers can now apply for a VA Jumbo Loan up to $1,000,000 utilizing the VALoans.com Super Max program. You can apply for a home loan with no money down under new VA Loans Maximum Guaranty

• No money down for qualified borrowers for home loans up to a maximum of $417,000 or the higher limits for certain counties.
  
• The VA guarantees the loan up to a maximum guaranty amount of 25% of the loan.

Your VA guaranty amount is calculated based on the total amount of the home loan excluding higher amounts for certain counties.

Example Not Using Higher Limit Counties: If you borrowed the maximum no money down $417,000 VA home loan amount, the VA guaranty amount would be the maximum $104,250.

The same no-money down rules apply for the first $417,000 of your loan.

• Borrower pays a 25% down payment only on the amount above $417,000.
  
• Borrower pays the funding fee in cash for loans between $417,000 and $1,000,000.

Example Using Higher Limit Counties: If you borrowed the maximum no money down $729,750 VA home loan amount, the VA guaranty amount would be the maximum $182,438.

The same no-money down rules apply for the first $729,750 of your loan.

• The same no-money down rules apply for the first $417,000 of your loan.
  
• Borrower pays a 25% down payment only on the amount above $417,000.
  
• Borrower pays the funding fee in cash for loans between $417,000 and $1,000,000. 

Example in counties with maximum $0 down loan of $417,000 using a sample loan amount of $690,000:

• The first $417,000 of the loan = $0 down.
  
• Any amount in excess of $417,000 = 25% down payment on that amount.
  
• A total loan of $690,000 would be $273,000 over the no money down limit of $417,000.
  
• Your 25% down payment on that $273,000 = $68,250.
  
• You are also required to pay a funding fee in cash up front.

Example in counties with maximum $0 down loan of $729,750 using a sample loan amount of $1,000,000:

• The first $729,750 of the loan = $0 down.
  
• Any amount in excess of $729,750 = 25% down payment on that amount.
  
• A total loan of $1,000,000 would be $270,250 over the no money down limit of $729,750.
  
• Your 25% down payment on that $270,250 = $67,563.
  
• You are also required to pay a funding fee in cash up front. 

Additional information on all Super Jumbo VA Loans:

• Minimum FICO score of 680 required for loans above $650,000.
  
• Manufactured homes are not eligible for VALoans.com Super Max program.
  
• Funding fees cannot be financed above conforming loan limits.
  
• 2- to 4-unit purchase transactions and all refinance transactions will remain at conforming loan limits. They are not available under this VA Jumbo Program.
  
• Refinance transactions remain at conforming loan limits.
  
• The funding fee must be paid in cash either by the veteran or the seller.
  
• The VALoans.com Super Max program is for fixed rate loans only.
  
• Other terms and conditions may apply.