Veterans need loans, too. At least, that’s the message that we got from our most recent webinar on Real Estate 101, where listeners had VA loan questions. So here, ladies, in your honor are some VA Loan Frequently Asked Questions. And hey, thanks for serving!
What Is A “VA Loan”?
Unlike, say, Wells Fargo or Chase, the Veterans Administration does not issue mortgage loans. It does, however, guarantee loans that are issued by others. The strength of that guarantee has helped thousands of veterans buy homes since 1944. Because the guarantee can work with different lenders, and VA loans are easy to refinance and often come with lower closing costs than other loans, the program is generally considered to be one of the best helps to homebuyers around.
Who Is Eligible?
Generally, personnel who served 90 days during wartime, 181 days not during the Gulf War, or six years in the reserves. Some surviving spouses are also eligible. For a longer list of specific cases, check out this Veteran’s Administration Eligibility List. In addition, you’ll also need to qualify financially. Isaac F. Davis, writing in Veteran’s Journal, notes that your lender will balance your income, including income left over after taxes and major obligations, against the size of the loan that you’re seeking.
What Are The Current Loan Limits?
The government sets limits for the size of the loans that it will guarantee, which vary by county. The loan limits are as high as $1 million in high-cost places like San Francisco; Marin County, Calif.; and Nantucket, Mass., while it’s $735,000 in Manhattan and many adjoining counties in New Jersey, and $417,000 in most places in the Midwest, including Chicago and Little Rock, Ark. Note that the loan guarantee is for only 25% of that. For example, if you’re buying a $1.1 million condo, you might put $100,000 down and borrow $1 million, of which the VA guarantees $250,000.
I’m On Active Duty. How Do I Get A VA Loan?
You’ll need a “Certificate of Eligibility,” which you can get from the VA online. Or, your lender can get one for you if you provide a statement of service from your commanding officer. When you find a property, present your Certificate of Eligibility and your sales contract, and the VA will appraise the property and issue a “CRV,” a “Certificate of Reasonable Value,” which is the result of an appraisal that tells you the maximum allowable amount of your loan. Remember that, like any other appraisal, this establishes what the property is worth – it doesn’t check for potential problems with the home. For that, you should hire a home inspector.
Can I Use The Program More Than Once?
That’s the great thing about VA loans: You can. If you’ve previously bought a home with a VA loan and sold it, you can get your entitlement restored.
How Much Does This Cost?
The purchaser chips in a “funding fee” toward the cost of the loan. This fee increases as your down payment drops, so it’s 1.25% if you’re making a 10% down payment, but 2.15% if you’re going the zero-down-payment route.