VA Home Loan Guaranty Program
What is a VA Guaranteed Loan?
These loans are made by a lender, such as a mortgage company, savings and loan or bank. VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn't previously used the benefit may be able to obtain a VA loan up to $203,000 depending on the borrower's income level and the appraised value of the property. The local VA office can provide more details on guaranty and entitlement amounts.
What Can a VA Loan Be Used For?
- To buy a home, including townhouse or condominium unit in a VA-approved
project.
- To build a home.
- To simultaneously purchase and improve a home.
- To improve a home by installing energy related features such as
solar or heating/cooling systems, water heaters, insulation,
weather stripping/caulking,
storm windows/doors or other energy efficient improvements approved
by the lender and VA. These features may be added with the purchase
of an
existing dwelling or by refinancing a home owned and occupied
by the veteran. A loan can be increased up to $3,000 based on documented
costs
or up to $6,000 if the increase in the mortgage payment is offset
by the expected reduction in utility costs. A refinancing loan
may not exceed
90 percent of the appraised value plus the costs of the improvements.
Check with a lender or VA for details.
- To refinance an existing home loan up to 90 percent of the
VA-established reasonable value or to refinance an existing
VA loan to reduce
the interest rate.
- To buy a manufactured home and/or lot.
Who is Eligible?
Veterans with active duty service, which was not 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.
Persian Gulf Conflict. Basically, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible. VA regional office personnel may assist with eligibility questions.
Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving may be eligible. The expanded eligibility for Reserves and National Guard individuals will expire September 30,2003. Contact the local VA office at 1-800-827-1000 to find out what is needed to establish eligibility. Reservists will pay a slightly higher funding fee than regular veterans.
Five Easy Steps to a VA Loan
Apply for a Certificate of Eligibility.
A veteran who doesn't have a certificate can obtain one easily by making application on VA Form 26-1880, Request for Determination of Eligibility and Available Loan Guaranty Entitlement to the local VA office.
-
Decide on a home the buyer wants to buy and sign a purchase agreement.
- 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 at 1-800-827-1000.
-
Apply to a mortgage lender for the 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.
- Close the loan and the buyer moves in.
Need More Information?
Veterans seeking more detailed information concerning the VA home loan program may request VA Pamphlet 26-4, VA-Guaranteed Home Loans for Veterans, or VA Pamphlet 26-6, To the Home Buying Veteran, from the nearest VA office by calling 1-800-827-1000. Loan Guaranty personnel at that office will also be pleased to answer specific questions and provide any other assistance they can.
Other Related Benefits
For More Information
Contact the VA Home Loan Center at 1-800-827-1000 or get more information at the VA website.
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