For anyone who is currently serving or has served in the United State’s military, it is possible to get a VA home loan. Through the GI Bill of Rights, signed in 1944 by President Franklin D. Roosevelt, housing and assistance is guaranteed for veterans and their families.
To qualify for VA financing, one needs to be a veteran who served on active duty and have a discharged (void for those with a dishonorable discharge) after at least 90 days service during wartime, or 181 continuous peacetime days. For veterans who enlisted and served after 09/07/1980 or an officer who began after 10/16/1981, there is a two-year requirement.
Through
a VA loan program, up to 25% of a home loan and up to $104,250 is guaranteed. This guarantee thus limits a maximum loan to $417,000. These loans are provided through private lenders (banks, mortgage companies, savings & loans) for veterans who intend to use the property for their own residence.
In 2008, a law was passed that further defined VA
mortgage loan limits. There is a zero down payment in qualified counties. Be sure to research the qualifications and borders of the county your sought after home will be in. The maximum loan amounts vary, depending on where you live and how much you can pay yourself.
There are several VA loan rates that are available to veterans. There is a fixed-rate VA loan, which is negotiable with your lender. Rates have been around 5% – 7% in the past several years. Another option is an adjustable rate loan. In this loan, the interest can be adjusted one percent each year, but only five times throughout the loan period. Be sure to analyze and evaluate what you will be able to pay in the duration of the loan period, and choose the option best suited to your situation.
A Certificate of Eligibility (aka VA loan certificate) may be necessary to show when you apply for a VA loan. To request a Certificate of Eligibility for VA home loan benefits, you must complete a VA Form 26-1880. These can be found on the U.S. Department of Veterans Affairs website. Once the form is complete, you must submit both the form and proof of service to the VA Eligibility Center.
Another way to attain a Certificate of Eligibility is from your lender. The majority of lenders are able to access the Automated Certificate of Eligibility (ACE) system through the Internet. ACE can establish eligibility and issue online Certificates in seconds. However, not all cases can be approved through ACE; only those that the VA department has sufficient data of can be processed.
It is possible to obtain two VA loans, but you may only be able to be paying off one. This means that the first VA loan has to be completely paid off before you apply for the next. To reuse your eligibility, you must send the VA Form 26-1880 to the Eligibility Center again and receive a new Certificate of Eligibility.
There are four main parts to VA loan guidelines: eligibility, occupancy, income, and debts and credit. Eligibility guidelines state the service requirements, and the necessity of a Certificate of Eligibility. Occupancy guidelines state that the veteran must live in the property, and other such rules. Income guidelines state that the veteran must have a steady and reliable income. Finally, debt and credit guidelines state what is acceptable and not from the past.
Here are some other guidelines to familiarize you:
- VA loans can be used for progressive and regular renovations to a home
- VA loans can’t be used for land loans, non-residential items (i.e. RVs, houseboats) or investment properties.
- A VA Certificate of Commitment needs to be sent to the VA approved mortgage lender. (This is the guarantee on the new loan.)