VA Loan - Frequently Asked Questions

VA Loans have many features and some very important restrictions. It is understandable that you may have questions related to specific scenarios about the VA Home Loan Program.

The easiest way to get answers to specific questions is to call VALoanPlace.com and speak to a knowledgeable VA Loan specialist. We can be reached Toll-Free at 1-866-704-2826.

Following are answers to the questions we are asked most often.

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What is the VA’s role in a VA Home Loan?

The VA partially guarantees loans made by private lenders to veterans. The VA Home loan program was designed as a benefit to veterans to make it easier for veterans to achieve home ownership. Because the VA guarantees a portion of the loan, lenders are able to make VA loans available with no down payment requirement. The VA’s guaranty is protection to the lender, much like a down payment.

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I have heard about pre-purchase counseling, is it required?

Pre-purchase counseling is not required, but is certainly worth considering, especially for first-time homebuyers. Counseling serves to familiarize you with the process and terminology related to buying a home, and also how to budget for your purchase. The goal is to help you become a better informed buyer.

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I have a Certificate of Eligibility, am I guaranteed a loan?

No. The certificate only confirms that you have met the minimum service requirements to be “eligible” for the VA home loan benefit. You must be approved by a VA authorized lender, who will then underwrite and fund your loan.

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What is entitlement? How much is my entitlement?

Entitlement is the amount of the loan the VA guarantees. A veteran’s basic entitlement is $36,000. A veteran may purchase a home for up to 4 times their available entitlement. For purchase loans over $144,000 the VA offers additional entitlement up to the Fannie Mae conforming loan limit for that county.

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What is the maximum loan available on a VA loan?

The VA loan limits change from time to time. Currently the loan VA loan limit is $417,000. This means that qualified veterans may purchase a home with no down payment up to $417,000. If the price of the home exceeds $417,000 you will need to be prepared to pay 25% of the difference.

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How do I get a VA Loan?

The VA does not actually fund loans; they only guarantee a portion of the loan to a lender. To obtain a loan, you must apply with a VA approved lender. The lender will verify your eligibility, review your income and credit, and make a decision on the loan. The VA cannot compel a lender to approve a loan.

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Where do I get a Certificate of Eligibility?

In most cases, your VA lender should be willing to assist you with obtaining your certificate. Lenders have access to a VA database called ACE (Automated Certificate of Eligibility). If the VA has enough information in ACE about a veteran, the lender can retrieve a copy of your certificate in seconds.

Ace does not have information about every veteran; in some cases the lender will need additional information, such as a printout of you DD214, to access your certificate. You can also request your certificate by mailing VA form 26-1880 to the VA’s eligibility center in North Carolina, but requests by mail take much longer to process.

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What is the VA Funding Fee? Can it be waived?

The VA funding fee is charged by the VA on every loan, whether a purchase or a refinance. (Veterans with a 10% or higher service-related disability are exempt from the funding fee). The funding fee is paid to the VA to help defray the cost of administering the program, and cannot be waived.

Can I qualify for a VA loan if I've had a previous bankruptcy?

Yes, it is possible to get a VA loan following a bankruptcy. The VA guidelines state if the bankruptcy was discharged over 2 years ago, it may be disregarded.

You cannot have any derogatory credit following the bankruptcy. It helps if you have established some new lines of credit since the bankruptcy, and of course there are many other factors the lender will consider. It is best to contact a lender and have them review the factors that caused the bankruptcy and your current financial situation.

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Can I qualify for a VA loan if I've had a prior foreclosure or short sale?

A foreclosure, deed-in-lieu of foreclosure or short sale within the previous two years since the disposition date is generally not eligible for a VA insured mortgage. Also, if the foreclosure involved a VA loan, the veteran may not have full entitlement available for future VA loans. If 2 or more years have passed you may qualify. You should contact a VA authorized lender to review your current financial situation.

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What are the advantages of a VA home loan?

VA home loans offer many advantages. They are about the only loan that requires no down payment. VA loans are normally easier to qualify for. There is no pre-payment penalty, and VA loans are assumable. Rates are attractive, and VA loans have no monthly mortgage insurance requirement. The VA also allows the seller to pay closing costs, allowing veterans to buy a home with little or no out-of-pocket expense.

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Does the VA warranty the home I purchase?

No. The VA only guarantees the loan. The VA appraisal is used to determine the value of the property, and to verify the property meets or exceeds the minimum condition requirements to be eligible as security for the loan. The VA recommends you have an independent inspection done for your protection prior to purchasing any home.

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Can I get a VA loan for a property not located in the U.S.?

No, the VA only guarantees loans for properties located in the United States.

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I already own a home; can I use a VA loan for an investment property?

No. The VA requires the veteran to occupy the property within 60 days of closing. If the veteran is unable to occupy the property due to deployment, the spouse can satisfy that requirement. Loans for investment properties or second homes are not allowed.

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Can I have a co-signer on a VA loan to help me qualify?

A spouse as a co-signer is allowed, and the income of the spouse will be considered. Two eligible veterans who wish to join together to purchase a home is also allowed. Any other co-signer will require the prior approval of the VA. Most lenders are unwilling to make this type of loan because the amount of the guaranty the VA provides is reduced in this situation.

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If I die, does the VA pay my house off since they guarantee the loan?

No. The surviving spouse must continue to make the payments to retain possession of the home. If there is no spouse, the property becomes a part of the veteran’s estate.

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