More than 29 million veterans and service personnel are eligible for VA financing. Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.

1. Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans
2. Most important consideration, no down payment is required in most cases.
3. Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Due to secondary market requirements, however, loans may not exceed 1 million dollars.
4. Flexibility of negotiating interest rates with the lender.
5. No monthly mortgage insurance premium to pay.
6. Limitation on buyer's closing costs.
7. An appraisal which informs the buyer of property value.
9. For most loans for new houses, construction is inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year warranty is required from the builder that the house is built in conformity with the approved plans and specifications. In those cases where the builder provides an acceptable 10-year warranty plan, only a final inspection may be required.
10. An assumable mortgage, subject to VA approval of the assumer's credit.
11. Right to prepay loan without penalty.
12. VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.

5 Steps to a VA Loan

1. Apply for a Certificate of Eligibility.
   A veteran who doesn't have a certificate can obtain one easily by completing VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits and submitting it to one of the Eligibility Centers with copies of your most recent discharge or separation papers covering active military duty since September 16, 1940, which show active duty dates and type of discharge.
2. Decide on a home the buyer wants to buy and sign a purchase agreement
3. Order an appraisal from VA. (Usually this is done by the lender.)
   Most VA regional offices offer a "speed-up" telephone appraisal system. Call the local VA office for details.
4. Apply to a mortgage lender for the loan.
   While the appraisal is being done, the lender (mortgage company, savings and loan, bank, etc.) can be gathering credit and income information. If the lender is authorized by VA to do automatic processing, upon receipt of the VA or LAPP appraised value determination, the loan can be approved and closed without waiting for VA's review of the credit application. For loans that must first be approved by VA, the lender will send the application to the local VA office, which will notify the lender of its decision.
5. Close the loan and the buyer moves in.

Who is Eligible for a VA Loan?

Persian Gulf Conflict. Basically, 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. VA regional office personnel may assist with eligibility questions.

Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving may be eligible. The expanded eligibility for Reserves and National Guard individuals will expire September 30, 2003. Contact the local VA office to find out what is needed to establish eligibility. Reservists will pay a slightly higher funding fee than regular veterans.

VA Loan Eligibility

Question: How do I apply for a VA guaranteed loan?

Answer: You can apply for a VA loan at any mortgage company that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from VA to prove to the mortgage company that you are eligible for a VA loan.

Question: How do I get a Certificate of Eligibility?

Answer: To get a Certificate of Eligibility, you need to submit form 26-1880, Request for Determination of Eligibility and Available Loan Guaranty Entitlement. A copy of the form can be obtained by calling 800-827-1000. Send it to any VA Regional Office. You must include a copy of your DD214 with the form 26-1880. If you are on active duty, you must submit a statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing date of entry on your current active duty period and the duration of any time lost.

Question: I have already received one VA loan. Can I get another one?

Answer: Yes, depending on the circumstances. If you have paid off your prior VA loan and disposed of the property, you can have your entitlement restored for additional use. To obtain restoration of entitlement, you must send VA a completed VA Form 26-1880, along with evidence that the property has been disposed of and the loan repaid in full. This evidence can be in the form of a pay-off statement from the former mortgage company, or a copy of the HUD-1 settlement statement completed in connection with the sale of the property. The application can be presented to any VA Regional Office. A veteran can also obtain restoration of entitlement, on a one-time basis, if the prior VA loan has been paid in full but the property has not been sold.

Question: I have sold the property I obtained with my prior VA loan on an assumption. Why can't I get my entitlement restored to purchase a new home?

Answer: In this case the your entitlement can be restored only if the assumer is also an eligible veteran who is willing to substitute his or her entitlement for that of your original entitlement. Otherwise, you cannot have entitlement restored until the assumer has paid off the VA loan.

Question: My prior VA loan was assumed, the assumer defaulted on the loan, and VA paid a claim to the mortgage company. VA said it wasn't my fault and waived the debt. Now I need a new VA loan but am told that I am not eligible. Why not? or My prior loan was foreclosed on, or I gave a Deed in Lieu of Foreclosure, or VA paid a compromise claim. I was released from liability on the loan and/or the debt was waived. Can I get another VA loan?

Answer: Although the your debt was waived by VA, the Government has still suffered a loss on the loan. The law does not permit the your entitlement to be restored until the loss has been repaid in full.

VA Loan Questions and Answers

Question:  Can I get a VA loan if I have had a bankruptcy in the last few years?

Answer:  VA credit standards state that a veteran with a bankruptcy less than 3 years ago would generally not be considered a satisfactory credit risk unless: the veteran or spouse has obtained items on credit since the bankruptcy and has paid the obligations in a satisfactory manner for a continued period; and the bankruptcy was caused by circumstances beyond the control of the borrower, which would have to be verified. A bankruptcy discharged 3 to 5 years ago must be given some consideration in the underwriting of the loan. A bankruptcy discharged more than 5 years ago may be disregarded. These are the minimum standards that mortgage companies must follow when making a VA loan. In 95% of the cases, companies make the decision to approve a loan without VA's prior approval. Keep in mind that mortgage companies also have money at risk in giving you a VA loan, so they may have stricter credit standards than those mandated by VA.

Question:  How big of a loan can I get? If my guaranty entitlement is $36,000, does this mean I am limited to a $36,000 loan?

Answer:  There is no limit on the size of a VA guaranteed home loan, provided that the veteran is qualified for the loan from a credit and income standpoint. However, as a practical matter, companies will generally limit the maximum loan amount to 4 times the amount of the veteran's available entitlement plus any down payment. Currently, the maximum entitlement on loans above $144,000 is $50,750, which will support a no down payment loan of up to $203,000.

Question:  Why do I have to pay a fee for a VA home loan? Since I paid a fee for my first loan, why is there a larger fee for my second loan?

Answer:  The VA funding fee is required by law. The fee, currently 2 percent on no down payment loans, 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. The funding fee for second time users who do not make a down payment is 3 percent. 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 percent pay a reduced funding fee of 1.5 percent, the same as first time users making the same down payment. For a 10 percent down payment, the fee drops to 1.25 percent. The effect of the funding fee on a veteran's financial situation is minimized since the fee may be financed in the loan.

Question:  May a veteran join with a non veteran who is not his or her spouse in obtaining a VA loan?

Answer:  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 mortgage companies to determine whether they would be willing to accept applications for joint loans of this type. Mortgage companies that are willing to make these types of loans will likely require a down payment to cover risk on the un-guaranteed, non-veteran's portion of the loan. Unlike other loans, the mortgage company 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 adequate to cover the rest.

Florida VA Regional Offices

VA Benefits 1-800-827-1000
Life Insurance 1-800-669-8477
Debt Management Center 1-800-827-0648
Education Loans 1-800-326-8276
TDD Line 1-800-829-4833
CHAMPVA 1-800-733-8387
Headstones and Markers 1-800-697-6947
Persian Gulf Helpline 1-800-PGW-VETS
VA ONLINE 1-800-US1-VETS (871-8387)

FLORIDA
Regional Office:
St. Petersburg 33701 (144 1st Ave. S., 727-898-2121; 1-800-827-1000)