A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required.

A VA home loan can be used to purchase a home or refinance an existing mortgage.

We will discuss what role the VA plays in a VA guaranteed mortgage, the benefits of a VA home loan, who is eligible for a VA loan, and the VA documentation you will need to present to your lender.

Did you know that more than 27 million veterans and service personnel are eligible for VA financing, yet most aren't aware it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement?

VA Does Not Offer Loans Directly and Does Not Guaranty You Will Qualify.

VA does not actually lend the money to you directly. They offer a guaranty to a lender that if you should default on the loan, they will pay the lender a percentage of the loan balance. The word GUARANTY does not actually guaranty the veteran will qualify for a VA home loan.

Primary Benefits of a VA Home Loan:

o100% financing
oNo monthly private mortgage insurance is required
oThere is a limitation on buyers closing costs
oThe loan is assumable, subject to VA approval of the assumer's credit
o30 year fixed loan
oSeller can pay up to 4% of the veterans closing costs and even pay down your debt to help lower your debt-to-income ratio
oInterest rates are similar to FHA rates
oYou don't need perfect credit
Who is Eligible for a VA Home Loan?

Wartime/Conflict Veterans

Wartime/Conflict Veterans who were not dishonorably discharged, and served at least 90 days:

oWorld War II - September 16, 1940 to July 25, 1947
oKorean Conflict - June 27, 1950 to January 31, 1955
oVietnam Era - August 5, 1964 to May 7, 1975
oPersian Gulf War - Check with VA regional office for specific eligibility.
oAfghanistan and Iraq - Check the VA's Web site for eligibility guidelines for current service in Afghanistan and Iraq.
Reserves and National Guard

Members who have completed six years of service and have been honorably discharged (or are still serving) may be eligible for a VA loan. Contact your regional VA office for more details.

Peacetime Service

Peacetime service of at least 181 days of continuous active duty with no dishonorable discharge. If you were discharged earlier due to a service-connected disability, you should speak with the regional VA office to verify eligibility.

oJuly 26, 1947 to June 26, 1950
oFebruary 1, 1955 to August 4, 1964, or
oMay 8, 1975 to September 7, 1980 (enlisted) or to October 16, 1981 (officer)
oEnlisted veterans whose service began after September 7, 1980, or officers whose service began after October 16, 1981, must normally have served at least two years.
Other types of service that may make you eligible for a VA loan:

oCertain US citizens who served in the armed forces of a government allied with the United States during World War II.
oSurviving spouses of eligible persons who died as the result of service or service-connected injuries. The surviving spouse must not have remarried.
oThe spouse of any member of the Armed Forces serving on active duty who has been listed as a prisoner of war or missing in action for more than 90 days.
VA Documentation Needed:

The three specific pieces of documentation a lender will need to determine your eligibility is a DD214 for discharged veterans, a statement of service for active military personnel, and a certificate of eligibility (COE) to determine you have VA entitlement.

Because each lender has different qualifying guidelines, the next step is to contact your lender to find out if you meet their qualifying criteria such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your county's maximum loan amount is. Your lender can help you attain your certificate of eligibility on your behalf.

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Frequently Asked Questions:
Q: I have already obtained one VA loan. Can I get another one?

Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send VA a completed VA Form 26-1880 to one of the VA Eligibility Centers. To prevent delays in processing, it is also advisable to include evidence that the prior loan has been paid in full and, if applicable, the property disposed of. This evidence can be in the form of a paid-in-full statement from the former lender, or a copy of the HUD-1 settlement statement completed in connection with a sale of the property or refinance of the prior loan.

Q: How can I obtain proof of military service?

Standard Form 180, Request Pertaining to Military Records, is used to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is NOT processed by VA.

Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.

Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?

The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit.

Q: What are the negatives of a VA Loan?

oVA loans made prior to March 1, 1988, can be assumed with no qualifying of the new buyer. If a buyer of such a property defaults, the veteran homeowner may be liable for funds.
oSome sellers may be hesitant to work with someone who is acquiring a VA loan because of their past reputation of taking longer to process than conventional loans. While the time may still be a little longer, getting a VA loan is not the lengthy ordeal it once was.
oSellers are often asked to pay a portion of closing costs, so they may not be eager to negotiate the sales price of the home.