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1) What is a VA loan?

The VA loan began in 1944 through the original Servicemen's Readjustment Act, also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans.
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. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

2) Why is a VA loan a good idea?

The more you know about our home loan program, the more you will realize how little "red tape" there really is in getting a VA loan. These loans are often made without any downpayment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer's loan can be processed and closed by the lender without waiting for VA's approval of the credit application.


3) What can a VA loan be used for?

To buy a home (including townhouse or condominium unit in a VA-approved project), to build a home, to simultaneously purchase and improve a home, to improve a home by installing energy-related features, or to buy a manufactured home and/or lot.


4) How much is the home loan guaranty?

VA will guarantee up to 50 percent of a home loan up to $45,000. For loans between $45,000 and $144,000, the minimum guaranty amount is $22,500, with a maximum guaranty, of up to 40 percent of the loan up to $36,000, subject to the amount of entitlement a veteran has available. For loans of more than $144,000 made for the purchase or construction of a home or to purchase a residential unit in a condominium or to refinance an existing VA guaranteed loan for interest rate reduction, the maximum guaranty is 25 percent up to $60,000.


5) What is the maximum VA loan?

Although there is no maximum VA loan (limited only by the reasonable value or the purchase price), lenders generally limit the maximum VA loan to $240,000 because most VA loans are sold in the secondary market, which limits VA loans to that amount.


6) Does VA make any loan directly to eligible veterans?

Yes, but only to Native Americans on trust land or to supplement a grant to get a specially adapted home for certain eligible veterans who have a permanent and total service-connected disability(ies). See VA Pamphlet 26-93-1 for information concerning direct loans to Native American Veterans. See VA Pamphlet 26-69-1 for information concerning specially adapted housing grants.


7) What can a veteran do who has lost his or her original discharge papers and does not have a legible copy?

The veteran should obtain a Certificate in Lieu of Lost or Destroyed Discharge. Any VA Veterans Benefits Counselor at the nearest VA office will assist a veteran in obtaining necessary proof of military service.


8) Does a veteran's home loan entitlement expire?

No. Home loan entitlement is generally good until used. However, the eligibility of service personnel is only available so long as they remain on active duty. If they are discharged or released from active duty before using their entitlement, a new determination of their eligibility must be made, based on the length of service and the type of discharge received.

Note: Eligibility for members of the Selected Reserve expires September 30, 2009.


9) May several veterans use their entitlement to acquire property together?

Yes. The guaranty is based on each veteran s interest in the property, but the guaranty on the loan may not exceed the lesser of 40 percent of the loan amount or $36,000 ($60,000 for certain loans over $144,000).


10) If both a husband and wife are eligible, may they acquire property jointly and so increase the amount which may be guaranteed?

They may acquire property jointly, but the amount of guaranty on the loan may no exceed the lesser of 40 percent of the loan amount or $36,000 ($60,000 for certain loans over $144,000).


11) May a veteran join with a non veteran in obtaining a VA loan?

Yes, but the guaranty is based only on the veteran's portion of the loan. The guaranty cannot cover the nonveteran's part of the loan. This does not apply to a loan to a veteran and spouse when the spouse is not a veteran. (Our company will not accept applications for joint loans of this type.)


12) Can a veteran get a VA business loan?

No. but business loans may be obtained through the SBA (Small Business Administration). The SBA gives preference to veterans wishing to obtain small business assistance. For more information on this financing, consult your telephone directory for the SBA office nearest you.


13) Can a veteran get a VA farm loan?

No, except for a farm on which there is a farm residence which will be personally occupied by the veteran as a home. The veteran may or may not conduct farming operations. If farming operations are to be the primary source of the borrower's income, then it must be established that the venture has a reasonable likelihood for success. If the borrower plans to use the residence, but has a source of income other than the farm which will be the primary source of income, then the farming operations need not be considered. Other types of farm financing may be obtained through the Farmers Home Administration which gives preference to veteran applicants. Additional information can be obtained by contacting a local office of that agency, the address and telephone number of which can be found in your telephone directory.


14) Can a veteran get a VA loan to buy or construct a residential property containing more than one family unit?

Yes, but the total number of separate units cannot be more than four if one veteran is buying. If more than one veteran is buying, then one additional family unit may be added to the basic four for each veteran participating; thus, one veteran could buy four units; two veterans, six units; three veterans, seven units, etc.
In addition, if the veteran must depend on rental income from the property to qualify for the loan, the veteran must (a) show that he or she has the background or qualifications to be successful as a landlord, and (b) have enough cash reserves to make the loan payments for at least 6 months without help from the rental income.

15) Can a veteran obtain a VA loan for the purchase of property in a foreign country?

No. The property must be located in the United States, its territories, or possessions. The latter consist of Puerto Rico, Guam, Virgin Islands, American Samoa and Northern Mariana Islands.


16) What is a VA-guaranteed manufactured home loan?

VA-guaranteed manufactured home loans are made by private lenders such as finance companies. The guaranty means that VA will protect the lender against loss if the veteran or a later owner fails to repay the loan. The amount VA will guarantee is 40 percent of the loan amount or the veteran's available entitlement, up to a maximum amount of $20,000. The guaranty amount is not the same as the amount a veteran can borrow.


17) I am a Veteran who purchased a home with my spouse utilizing my VA eligibility. I am now divorced and my spouse was awarded the home. How do I get my eligibility back?

When the property is awarded to the Veteran's spouse as a result of the divorce, entitlement cannot be restored unless the spouse refinances the property and / or pays off the VA loan in full or the ex-spouse is a veteran who substitutes their entitlement.


18) Do I need to owner occupy the home that I purchase with my VA eligibility?

The law requires a veteran obtaining a VA guaranteed loan to certify that he or she intends to personally occupy the property as his or her home. As of the date of certification, the veteran must either (1) personally live in the property as his or her home, or (2) intend, upon completion of the loan and acquisition of the dwelling, to personally move into the property and use it as his or her home within 60 days after the loan closing (reasonable).
The above requirement applies to all types of VA guaranteed loans except Interest Rate Reduction Refinancing Loans (IRRRLs). For IRRRLs, the veteran need only certify that he or she previously occupied the property as his or her home.