5th Jul, 2009

VA Loans – The Facts

 

VA Loans are a benefit for Military Personnel (active duty, veterans, reservists, surviving spouses).  VA will guarantee up to 25% of the mortgage.

Customer Benefits

  • Eligible for 100% financing under most circumstances
  • No monthly mortgage insurance
  • No Pre-Payment Penalty
  • No minimum FICO Score
  • Seller can pay closing costs
  • No limit on “non-recurring” closing costs (appraisal, credit, etc) or discount points with 4% limit on funding fee, pre-paids or buy-down funds

Funding Fee

  • Similar to FHA Up Front Mortgage Insurance
  • Amount of Funding fee is based on service type, prior use, and transaction type. If borrower is a disabled veteran (VA must certify), then funding fee is waived
  • Funding fee may be financed or paid in cash

 Entitlement

  • Entitlement is the dollar amount of the guaranty available to the veteran
  • Veteran with full entitlement can often purchase a home with zero down payment
  • Certificate of Eligibility will document available entitlement

 Loan Limits

  • FHLMC Conforming Loan limit (currently $417,000)

 Eligible Transactions

  • Purchase
  • Full Refinance (Rate/Term, Cash Out) or IRRL (Interest Rate Reduction Loan) – VA “Streamline” Refinance

 Eligible Borrowers

  • U.S. Citizens, Permanent Resident Aliens, and non-Permanent Resident Aliens
  • Co-Borrower must be borrower’s spouse
  • If co-borrower is not the borrower’s spouse, this is considered a “joint loan”. Guaranty will be based on veteran’s portion of the loan (often requiring a down payment).

 Eligible Products

  • 20-30 Year Fixed, 15 Year Fixed, 3/1 ARM, and 5/1 ARM

 Property

  • Eligible Properties: Single Family, 2-4, Condos, Manufactured Homes, New or Existing Construction
  • Condominium projects MUST BE approved by VA (no spot approvals)

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