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VA Program

5 Steps to a VA Loan

1. Apply for a Certificate of EligibilityA 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 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 for a VA 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 move in.

Who is Eligible for a VA Loan?

Veterans who served on active duty and were discharged under conditions other than dishonorable, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years 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 have 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; or have 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.

If you served on active duty during the Gulf War, you must have completed 2 years 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 have 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.

If you are now on regular active 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.

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. Eligibility for Selected Reservists expires 09/30/2009.

You may also be determined eligible if you are an unremarried 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 or war.

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 WWII and 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.

Financing Benefits

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 generally may not exceed $417,000.
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.
8. Thirty year loans with a choice of repayment plans:

1. Traditional fixed payment (constant principal and interest; increases or decreases may be expected in property taxes and homeowner's insurance coverage);
2. Graduated Payment Mortgage--GPM (low initial payments which gradually rise to a level payment starting in the sixth year); and
3. In some areas, Growing Equity Mortgages-GEMs (gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan).
4. The VA now offers a hybrid ARM product, so you may choose between a fixed rate or an adjustable rate.
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.

* The higher subsequent use fee does not apply to these types of loans if the veterans only prior use of entitlement was for a manufactured home loan.

NOTE: For all VA home loans, the funding fee may be paid in cash or it may be included in the loan. Veterans who qualify as 10% disabled or greater as a result of active military service are not required to pay a funding fee. Those who are not exempt from a funding fee may lower their fee by putting money down on their VA home purchase.

In addition, reasonable closing costs may be charged by the mortgage company. These costs may not be included in the loan. The following items may be paid by the veteran purchaser, the seller, or shared. Closing costs may vary among companies and also throughout the nation because of differing local laws and customs.

VA loan costs may include VA appraisal, credit report, loan origination fee (usually 1 percent of the loan), discount points, title search and title insurance, recording fees, state and/or local transfer taxes, if applicable, survey

No commissions, brokerage fees or "buyer broker" fees may be charged to the veteran buyer.