VA loans experience a revival. Why?
There has been a surge in VA pre approvals over the past few months. The main reason for this increase is the availability of ZERO down financing with the VA and the fact that it comes with no monthly mortgage insurance premiums. It is virtually the only loan product left that will allow no money down. Below is some information on VA loans.
Advantages of VA Financing
- No down payment is required for veterans with full entitlement on real estate purchases up to $729,000.
- Liberal underwriting criteria.
- Fully assumable.
- No prepayment penalties.
- Fixed rates & adjustable rates available.
- All funds used may be gifted from a relative.
Eligible Property
Single family residences, 2-4 units and VA or FHA approved condos and townhomes are eligible. The property must be occupied by the veteran.
General Information
Occupancy: Veterans must occupy the property, or if on active duty, the spouse must occupy the property.
Assumability: VA loans are assumable subject to a credit qualification of the new borrower.
Two or more vets buying: Permitted as long as occupancy requirements, minimum down payment (if applicable) and maximum loan limits are met. Each veterans entitlement will be applied towards the loan. The maximum loan amount remains at $729,000 for all properties.
Entitlement: The current maximum loan guarantee is $50,750. This permits the acquisition of properties with values as high as $729,000.
Co-Borrowers: Income from co-borrowers may be used toward the qualifying ratios. They must occupy the property and be the spouse, another veteran or the betrothed of the veteran.
National Guard & Reserve Members: Now qualify after six years of duty. Higher VA guarantee fee required.
Maximum Loan Amount
The maximum loan amount available to a veteran with full entitlement on a purchase with no down payment is $729,000. $729,000 is the maximum loan amount regardless of how many veterans are buying together or how many units are being bought. The VA funding fee of 2% may be added to the loan amount provided the combined loan does not exceed $729,000.
VA Funding Fee: The 1993 budget increased VA’s funding fees by .75%. The fee is charged by the VA.
| % Down | Veterans | National Guard | Multiple Users |
| 0-4.99% | 2.00% | 2.75% | 3.00% |
| 5-9.99% | 1.50% | 2.25% | 1.50% |
| 10%+ | 1.25% | 2.00% | 1.25% |
Multiple users are veterans who are using their entitlement an additional time, with no down payment. The rate reduction refinance funding fee remains at 0.50%. This fee may be financed if adding it to the loan amount does not exceed the maximum of $729,000. The funding fee is waived for veterans with a 10% or more VA connected disability.
Certificate of Eligibility
To determine eligibility, the veteran must obtain a Certificate of Eligibility from the Veterans Administration. If the veteran has never requested a certificate, I will be happy to assist the veteran in obtaining the certificate. Veterans must supply a copy of their discharge papers (DD214) and complete a request for determination of eligibility form. If the veterans is still on active duty, a “Statement of Service” from their commanding officer will be required instead of the DD214.
Gifts: Cash gifts from relatives are acceptable and may be used either toward the down payment or closing costs. The source of funds must be documented.
Appraisal Clause
The VA appraisal clause must be a part of the “agreement of Sale and Deposit Receipt.” I would be happy to provide you with a copy if you don’t have one.
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6 Responses to “VA loans experience a revival. Why?”
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Thanks for the comprehensive information on VA loans! I have met quite a few veterans who have asked me about them, but these loans were not as available or attractive at the time. It’s good to hear that they’re making a comeback for those who more than deserve the help. I’ll be sure to pass this blog on to others.
Wow! This is very exciting! I am going to have to promote this! There are going to be a lot of veterans looking for homes pretty soon! Thanks for this informative post!
Dean, I didn’t realize that the VA has raised their load amount over $700,000. It really means that us veterans can qualify to get a loan for a new home. That is good news – Thanks!
Dean, great post thank you, suspect there will be a large demand for this product as our troops come home and want to start a family and own their own home, history repeating itself.
Great post Dean. I actually have a friend that is considering purchasing a home next year and was asking about a va loan. This information would be useful for him and many other. Thanks!
Interesting Dean!
One of my brothers who was in the Army reserves was able to buy a condo in San Bruno with no money down!