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VA Loan Guideline Summary

VA Loan Guidelines for Eligibility

VA Loans Guidelines for Loan Qualification – Purchase

VA Loans Guidelines for Loan Qualification - Refinance

FAQ's

VA Loan Guideline Summary

VA home loans are designed to provide assistance to veterans, active duty military personnel and surviving spouses of veterans with purchasing a home. The VA DOES NOT provide the loan, but they do Guarantee the loan in the event that the Veteran defaults on the loan.   Because the VA makes this guarantee, banks are willing to provide the loan at very competitive rates. The VA establishes the ground rules for whether or not a Veteran is ELIGIBLE.  The participating Lender/Bank establishes the ground rules for whether or not the Veteran QUALIFIES credit wise and financially.  

Using a VA loan, you can:

• Purchase a Home
  
  
• Refinance a VA loan on a home that you originally purchased using a VA Loan.
  
  
• Refinance a non-VA loan using your VA Loan on your primary residence.   

When purchasing a home, VA home loans are available up to $417,000 with $0 down payment (if entitlement amount allows) including the VA Funding Fee, if financed.

You can only purchase a 1 to 4 unit home you intend to live in and take possession of within a 60 days from closing. Single family, 1 unit homes are the most common property purchased with VA loans.

There are several advantages to purchasing with a VA loan including:

• Low interest rates
  
  
• Zero down payment
   
• It is possible to either finance or have the seller pay All or most of the Settlement charges (closing costs and prepaid items) 
  
  
• They are Assumable - The new borrower must qualify for the loan to assume it.

 VA Loan Guidelines for Eligibility

Military Service Requirements for VA Loan Eligibility:  The fastest way to see if you are eligible for VA or Tx Vet is to call Call Phil Martin at 972-359-0341 or 972-768-5664 on the weekend or email Phil Martin.   We’ll need a copy of your DD214 if you are not sure.   We have contacts with VA and can usually make this determination same day.

Active Duty Service Personnel
If you are now on regular 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.

Selected Reserves or National Guard
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.

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 of war

Note:  Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit.  However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility.  VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.

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 WW II.
• 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.

If you served in the Gulf War - Service during period 8/2/1990 to date yet to be determined
If you served on active duty during the Gulf War, you must have:

• Completed 24 months 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
• 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 served during Peacetime - Service during periods:

• 7/26/1947 to 6/26/1950
• 2/1/1955 to 8/4/1964
• 5/8/1975 to 9/7/1980 (Enlisted)
• 5/8/1975 to 10/16/1981 (Officer)

You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible if discharged for a service connected disability.

Service after 9/7/1980 (enlisted) or 10/16/1981 (officer)
If you were separated from service which began after these dates, you must have:

• Completed 24 months 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
• 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;
• 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 during a previous Wartime period- Service During:

• WWII: 9/16/1940 to 7/25/1947
• Korean: 6/27/1950 to 1/31/1955
• Vietnam: 8/5/1964 to 5/7/1975

You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability.

Note:  Applications involving other than honorable discharges – Call or email me to discuss. 

VA Loans Guidelines for
Loan Qualification - Purchase

Loan Amount - Loan to values up to 100%, plus the VA Funding fee, on loan amounts up to $417,000.

Loan Types – 15, 20 & 30 year fixed rate loan.

Occupancy - You MUST occupy the home you intend to buy. NO investment properties or second homes on a purchase.

Eligible Property Types - 1-4 unit homes, townhouse, approved Condos and PUDs primary residence only.

VA Funding Fee - VA does not require mortgage insurance, but, does require a VA Funding Fee. This is a percentage of the loan amount that can be paid at closing or financed in the loan amount.

• The VA Funding Fee for veterans is currently 2.15% for 1st use and 3.30% for subsequent use.
• National Guard & Reservists are 2.40% and 3.30%.       

NOTE:  Veterans with a 10% or greater VA compensable disability rating should be exempt from the VA Funding Fee.

Bankruptcy or Foreclosure:

• Chapter 7 - You must wait 2 years from the discharge date.
• Chapter 13 - You must have made all your payments on time for at least 12 months. Permission from the bankruptcy trustee is also required.
• Foreclosure- You must wait 2 years from the date of the foreclosure.
  If the loan was a VA loan and there was a balance due after the home was sold, you may have limited or no entitlement. Call me or email me

Credit Score - You MUST have a 620 mid-FICO credit score.   If you need help repairing your credit Click Here and learn how we can help.

Closing costs/Settlement Charges - VA limits what closing costs can be paid by the veteran. Classed as the "veteran's unallowable closing costs". This is an area that requires experience to ensure that all your advantages are leveraged.   Please call to discuss. The loan can be structured so that the Veteran does not pay anything out of pocket at close.

DTI - Your Debt-to-Income ratio must be approved via guidelines.  The ratio itself can range a great deal. Approval is based on a multitude of factors.  

Energy Efficiency Improvements - May be added to your loan amount up to $3000 if costs are documented.  Amounts over $3000, up to $6000 may be added but require the costs to be documented and must show the resulting increase in the monthly P&I payment does not exceed the likely reduction in the monthly utility costs resulting from the energy efficiency improvements. (This must be documented).

VA Loans Guidelines for
Loan Qualification - Refinance

VA Streamline Refinance Loan – Replacing one VA Loan with another VA Loan – also known as IRRRL (Interest Rate Reduction Refinance Loan).

Please email us or call our office for additional information. Click here for a Quote and Good Faith Estimate.

It is called “Streamline” because it is the easiest and cheapest way to refinance your existing VA loan if you are the veteran or surviving spouse of the veteran on the loan (veteran must have died on active duty or due to wounds received while on active duty).

The IRRRL is only available to veterans who are refinancing their original VA mortgage and utilizing their original eligibility.  The VA streamline refinance loan provides a way for current VA homeowners to lower their interest rate with little of no out-of-pocket costs.  No Cash Our Available.  Only reduction of rate and term. 

How easy is it to Refinance your VA loan with a Streamlined IRRRL?  

• The borrower has the option of rolling the closing costs into the new loan amount or paying for the closing cost in cash.
• An Appraisal may or may not be required depending on who is servicing your loan, the type of property and the occupancy status of the property and the new loan to value.
• No qualifying debt ratios, No income verification available on most VA IRRRLs. A credit report is required. Minimum credit score is 620 (Some restrictions – Call Phil).
• Borrower must be paying off a VA insured mortgage, using their own eligibility.
• All parties on the current loan and listed in title on the current loan must be listed on the new loan.
• 15 & 30 year fixed rate loans up to $417,000 loans.
• The new interest rate must be a lower rate than the current interest rate on the loan you are refinancing unless you are converting from a VA ARM loan to a fixed rate loan.
• The principal and interest payment on the new loan must be less than the principal and interest payment on the loan being refinanced unless:
• The loan being refinanced is a VA ARM
• The term of the new loan is shorter than the loan being refinanced
• Energy efficiency improvements are included in the new loan.
• Borrower may refinance all closing costs, including prepaids and Texas Vet loans, up to the appraised value or LTV limits.
• Energy efficiency improvements may be included up to $3000 - or up to $6000 if the increase in the monthly payment for the P&I (principal & interest) does not exceed the likely reduction in monthly utility costs resulting from the energy efficiency improvements.  This must be documented.  
• Late fees may not be financed.
• Mortgage payment must be current.
• VA only requires a satisfactory 12 month Mortgage History with NO 30 day or longer late payments. The lender may require more documentation.
• IRRRL loans can be used for the following types of properties: Primary residence, second homes & non-owner occupied (rental) properties, but the Veteran or spouse must provide evidence he/she lived in the property at one time.  Usually a statement from the borrower is acceptable.
• NO need to re-qualify on most loans - Income, Assets & Debts are not required unless the monthly payment - PITI (principal, interest, taxes & insurance) will increase by 20% or more on your new loan.

VA Regular Refinance Loan - Replacing one Non-VA Loan with a VA Loan

- Guidelines and qualification requirements are the same as for purchase loans, including the VA Funding Fee requirements.   Property must be your primary residence to qualify for this loan.    No investment properties or 2nd homes.

The borrower has the option of financing the closing costs into the new loan amount. Please email me or call me now at 866-711-8195 ext. 119 for additional information.
Complete our simple Get a Quote and a Good Faith Estimate will be emailed to you for your review.  Don't wait. Interest rates change daily. Take advantage of these low rates while they last.

How do I know if I have eligibility?   We need a current Certificate of Eligibility (COE) from the VA to determine exact eligibility.    Call or email me and as an approved VA lender, we’ll use the information on your DD214 to retrieve your COE from a special online system.  It usually only takes a couple of hours to retrieve.  Unfortunately, the automated system won't work for everyone and it may take longer.   But we will walk you through the process.

The certificate of eligibility process can be tricky for veterans who were separated from the military with a discharge other than honorable.  In this case the VA must investigate the discharge to insure it was not classified as dishonorable.  Veterans who fall into this category should seek help from their local VA office, especially if you need to file an appeal to the results of your request of eligibility.

Is the spouse or are the children of a veteran eligible?   An unmarried surviving spouse is eligible if the veteran died as a result of a service connected disability or while on active duty. Children are not eligible.

I'm a veteran. Can my fiancée and I purchase a home with a VA loan?   Since Texas is a common law state, the answer is MAYBE.

• If you are engaged and not living together as man and wife, the answer is NO. You must be married. The veteran can purchase in their name only using only their income and debts to qualify.
  
  
• If you are living together as man and wife and claim to be married under common law it is possible to get a VA loan. These are dealt with on a case by case basis. Please contact us for additional details.

May two or more veterans combine their eligibility to purchase a home ?   Yes, but the amount VA will guarantee remains the same - 25% of the loan amount, up to the maximum VA loan amount of $417,000.

Can I use my VA loan to purchase a second home or rental property?  No.  It must be your primary residence that you intend to move in to within 60 days of purchase.

How is my entitlement reinstated once I've used it to buy a home?

• When you have sold your previous home and the VA loan is paid in full
• When you have sold your previous home to a veteran who substitutes his/her entitlement for yours
• When you have paid off a VA loan, but still own the property. VA will reinstate your entitlement for this purpose one-time only. After that you must sell your properties that have or had VA financing on to use your entitlement again.
  

How is my entitlement reinstated once I've used it to buy a home if I get DIVORCED?

• Your ex-spouse must refinance the home and/or pay off the VA loan
• Your ex-spouse is a veteran who agrees to substitute entitlement for yours.

Who makes the loans?   Private lenders make the loans, however, the VA guarantee protects the lender against loss. The VA guarantees 25% of the loan amount.

If I still have a VA loan on a previous home, can I buy a new home with my VA Eligibility?   Maybe. This depends on how much entitlement you have left for VA to insure the new home. Call me at 866-711-8195 ext. 119 or email me