VA Mortgage Loans:
A Thank You For Your Service

VA mortgage loans are part of government sponsored assistance program dedicated to those women and men who served in any branch of the US 

armed forces, National Guard reserves and unmarried spouses of the deceased veterans as well as POWs and MIAs.

VA mortgage loans are a small token of gratitude of the nation to those men and women who have served this country honorably.

VA mortgages allow the veterans buy a home with Zero% down payment and there is no requirement for mortgage insurance (MI).

These are unique in this sense because all other programs will require some money upfront and/or require mortgage insurance.

Lenders everywhere love making VA loans.

First-time military homebuyers often have difficulty qualifying for traditional loans – especially those just returning home after deployment – for veterans a VA mortgage loan can be a great alternative and sometimes the difference of having a place to call home or not to have one.

Loan Guarantee

VA does things differently from other institutions: It is NOT a loan insurance program like FHA is.

VA will guarantee a portion of the loan.

VA mortgage loans will guarantee lenders in the market place a certain amount that will make lenders comfortable to compete for home loans for veterans.

The guarantee is usually about 20 to 25% (or more) of the property value.

It is a huge guarantee! In real estate that is gravy.

The actual dollars amount will change from time to time - so please keep in touch with your loan consultant s/he will have the actual figure that will apply to you – at the time of your application.

Entitlement

Entitlement is the dollar amount VA will guarantee to every eligible veteran to buy or build a home.

Your basic entitlement is $36,000... but it will vary from time to time and from place to place.

Most likely the lenders will multiply that amount by four – 4 X 36,000 = $144,000

However that is not set in stone because VA maximum loan amount varies from county to county:

The highest thus far is $1,094,625 in Nantucket County, Massachusetts.

VA mortgage loans are still subjected to the rules of the market

VA mortgage loans are “the most sure thing” for a veteran to get approved to finance a home.

However they are still subject to the “rules” of the market.

• Certificate of Reasonable Value (CRV) – this is the VA’s jargon for home appraisal. Actually I think that this is a more accurate expression of the property evaluation, once that appraisal is not a scientifically exact process.
• Your credit scores still need to comply with the current requirements
• Your proof of income as well as debt-to-income ratio

…and any other requirement that all other civilian folks have to meet

No Mortgage Insurance

VA does NOT call for nor will it allow mortgage insurance which is a great savings, even if you purchase the home with zero % down payment.

This feature alone is a great finance advantage to the veteran.

Any other program like conventional loans will require a percentage in down payment and, depending on the amount of the down payment you also will be required to use mortgage insurance until you pay a good bit of your mortgage loan.

Funding fee

VA does not require MI, however it will have a funding fee, which is paid at closing to the Department of Veterans Affairs for them to guarantee the loan to applicant veteran.

The fee will vary according to the amount of the loan and how many times the veteran has used his/her entitlement.

But in general the funding fee will be 2% of the loan amount if the veteran is using the entitlement for the first time

The fee will then go up to 3% in each of the subsequent times used.

VA does requires that previous property has been all completely disposed of before the veteran can receive his/her entitlement restored

Another great feature of VA mortgage loans program is that they will allow the funding fee to be included in the loan amount.

It does end up costing a bit more interest in the life of the loan but if money is tight up in the beginning, this feature may allow you to move forth with the purchase of your home with that initial expense getting in the way.

Zero % Down Payment

VA is the only source of loan nowadays that will allow zero % down payment.

This is another feature that can be helpful if you are tight for you’re your down payment.

However I like to caution the veterans that I work with that just because you “could,” it is not necessarily that you “should.”

If you buy with no money down, you will pay more in interest during the life of the loan AND your monthly payments will be higher.

So if you can come up with some upfront money for the down payment, you will actually save money in the long run.

Actually if you can put down 5% or more of the purchase price, VA funding fee will be lowered as well.

No Prepayment

VA prohibits prepayment penalties on loans they guarantee.

So this is more money in pocket while you enjoy your home!

By all means be watchful on this topic – please do not be taken advantage of on this.

Maximum Loan Amount:

VA does not exactly have a set maximum loan amount, what they will do is set a limit the “amount of protection” it will give the lender.

As far as VA loans go it is a “standard procedure” that banks will lend up to 4 times of that veteran’s “loan guarantee.”

However there are several areas of the country that amount can go even much higher: At a whopping $1,094,625 Nantucket County in Massachusetts has been the highest in the country thus far.

Direct VA Resources

VA has created a portal where you can go to clarify any doubts on how to get several benefits that might be available to you.

They call it “eBenefits” among them you can get your certificate of eligibility – please click here link to that page

Because of the nature of being part of a massive bureaucracy VA mortgage loans have lots of nuances beyond the scope this site – however please click to go directly VA’s rules for eligibility page

Assistance also can be attained by calling the eBenefits Help Desk at 1-800-983-0937.

Their hours are Monday-Friday, 8am to 8pm EST. (I just assume it is a very busy hotline)

The best of luck securing your VA mortgage loan.

My personal thanks for your service!

My humble hat goes off to you! Ways off!

Please also check these additional pages with further information on how to secure your VA mortgage loan:

JC Fagundes, Head Broker
EQUAL SERVICE TO ALL.
Residential. Commercial. Investments.
Ph: 404 801 4141

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