VA Mortgages

A VA loan is a loan guarantee for a home mortgage made on behalf of active-duty military and veterans of the armed forces. There are many qualifications to receive this loan guarantee, but the primary qualification is military service. The loan guarantee provides 100% financing with no requirement for private mortgage insurance, allowing the applying veteran to afford a larger monthly payment. Although there is an upfront VA required funding fee, there is no monthly mortgage insurance.  The program allows for the financing of 100% of the property but borrowers will still need to pay closing costs and need funds to set up an escrow account.  The seller can typically pay up to 4% of the buyers closing costs, thus reducing the amount of funds the borrower needs to close. 

The VA has been in existence since 1944 in one form or another.  Typically in most cases the VA is only guarantying the loan made by a participating lender. Should the borrower not make the payments and the loan go into default, the lender will make a claim to the VA to cover specific losses on the property.

A VA loan guarantee may only be used on one property at a time. In other words, a veteran may use the benefit to purchase his home, but the guaranteed loan must be paid off before he can use the benefit again. Usually, a veteran will sell his home, thus paying off the VA guaranteed loan, and then use his VA benefit to purchase his next home. Some VA loans are still assumable, as well. The veteran must be aware that if he allows someone to assume his VA guaranteed loan, the loan guarantee will be unavailable for him to use again until the assumed loan is repaid. You should note the upfront funding fee is higher for any subsequent use of a VA mortgage.

Often veterans think they are entitled to a VA mortgage just because of service in the military and this is incorrect.  They are entitled to participate in the program, but they must meet all loan qualifying requirements, including employment, income, and credit.

Eligibility F.A.Q.
 

Q: How do I apply for a VA guaranteed loan? A: You can apply directly with the Mortgage Group as our company 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 lender that you are eligible for a VA loan. Q: How do I get a Certificate of Eligibility? A: To provide our veterans additional service, we will request the Certificate of Eligibility directly from VA.  For us to complete this you will need to provide us with a copy of your DD form 214 and complete form 26-1882 (Request for a Certificate of Eligibility).  A PHOTOCOPY OF DD 214 WILL SUFFICE.....DO NOT SUBMIT AN ORIGINAL DOCUMENT. Q: What is acceptable proof of military service? A: If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost. If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge From Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A PHOTOCOPY OF DD 214 WILL SUFFICE.....DO NOT SUBMIT AN ORIGINAL DOCUMENT. If you were discharged from the Selected Reserves or the National Guard, you must include copies of adequate documentation of at least 6 years of honorable service. If you were discharged from the Army or Air Force National Guard, you may submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting, or it’s equivalent. If you were discharged from the Selected Reserve, you may submit a copy of your latest annual points statement and evidence of honorable service. Unfortunately, there is no single form used by the Reserves or National Guard similar to the DD Form 214. It is your responsibility to furnish adequate documentation of at least 6 years of honorable service. If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented. Q: How can I obtain proof of military service? A: 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: I have already obtained one VA loan. Can I get another one? A: 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 a completed VA Form 26-1880 to the Winston-Salem Eligibility Center. 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: I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan? A: In this case the veteran’s eligibility can be restored only if the qualified assumer is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assumer has paid off the VA loan. Q: My prior VA loan was assumed, the assumer defaulted on the loan, and VA paid a claim to the lender. VA said it wasn’t my fault and waived the debt. Now I need a new VA loan but I am told that my used eligibility can not be restored. Why? Or, Q: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have my used eligibility restored. Why? A: In either case, although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full. Q: Only a portion of my eligibility is available at this time because my prior loan has not been paid in full even though I don’t own the property anymore. Can I still obtain a VA guaranteed home loan? A: Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required. Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit? A: 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. If you wish to make application for the home loan benefit as a surviving spouse, contact the Winston-Salem Eligibility Center. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death), may obtain a VA guaranteed interest rate reduction refinance loan.   General Rules for Eligibility Military Service Requirements for VA Loan Eligibility: Note:  Applications involving other than honorable discharges will usually require further development by VA.  This is necessary to determine if the service was under other than dishonorable conditions. Wartime - Service During: WWII: 9/16/1940 to 7/25/1947 Korean: 6/27/1950 to 1/31/1955 Vietnam: 8/5/1964 to 5/7/1975 You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability. Peacetime - Service during periods: 7/26/1947 to 6/26/1950 2/1/1955 to 8/4/1964 5/8/1975 to 9/7/1980 (Enlisted) 5/8/1975 to 10/16/1981 (Officer) You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible if discharged for a service connected disability. Service after 9/7/1980 (enlisted) or 10/16/1981 (officer) If you were separated from service which began after these dates, you must have: Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensable service-connected disability; Been discharged with less than 181 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government. Gulf War - Service during period 8/2/1990 to date yet to be determined If you served on active duty during the Gulf War, you must have: Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or Been discharged with less than 90 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government. Active Duty Service Personnel If you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service. Selected Reserves or National Guard If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and Were discharged with an honorable discharge, or Were placed on the retired list, or Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service, or Continue to serve in the Selected Reserves Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability. You May also be determined eligible if you: Are an un-remarried spouse of a veteran who died while in service or from a service connected disability, or Are a spouse of a serviceperson missing in action or a prisoner of war Note:  Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit.  However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility.  VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004. Eligibility may also be established for: Certain United States citizens who served in the armed forces of a government allied with the United States in WW II. Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.