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What is a VA Guaranteed Home Loan?
VA loans are made by private lenders such as banks and mortgage companies. They allow eligible veterans to purchase a home for their own personal occupancy.
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Does “VA Guaranteed” mean that I will get a loan?
No. The “guaranty” protects the lender against loss while allowing you better financing options such as a lower down payment. Even with your entitlement, you must meet the requirements that qualify you for the loan.
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If I am a veteran, is a VA Home Loan always going to be my best option?
Not necessarily. Your lender will need to meet with you to review your unique needs and plans. Once that has been done, your lender can present your best mortgage options to you so you can make an informed decision. A VA Home Loan may be perfect for you or there may be a much better loan for your specific needs.
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How much can I borrow?
There is no maximum VA loan limit, but a no-down payment loan cannot exceed $417,000. To determine the actual amount you can qualify for and feel comfortable with, your lender will need to meet with you and perform an evaluation.
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How do I obtain my Certificate of Eligibility?
Your Certificate of Eligibility, from the VA, documents that you are eligible for a VA loan. In most cases, your lender can obtain it for you within a matter of seconds using the VA’s ACE (Automated Certificate of Eligibility) system. The VA encourages you to work with your lender to obtain it.
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How do I apply for a VA Guaranteed Home Loan?
A mortgage lender who is approved to participate in the VA home loan program can work with you on your VA loan application.
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What is a Certificate of Reasonable Value?
The VA Certificate of Reasonable Value is used to determine market value and support the purchase price of the property. It is not an inspection of the property. You should get an independent home inspection by a licensed inspector. Your lender can recommend a home inspector for you. The VA does not guarantee that the home is free of defects. You are responsible for determining if you are satisfied with its condition prior to legally committing to your purchase by signing a Purchase & Sale Agreement. |
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What if I am building a new home?
In most situations when a VA loan is being used for new construction, the construction is inspected at different stages to ensure that it complies with the approved plans. The VA cannot require the builder to correct construction defects. The VA can, however, suspend a builder from future participation in the home loan program.
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Does the VA provide legal services?
The VA does not provide legal services for your transaction. Seek advice from a real estate attorney to ensure that your interests are protected in the transaction. Also, the VA does not provide investment advice or guarantee that your home purchase is a good investment.
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Is the VA loan considered a gift?
No. It is a loan which must be repaid according to specific terms. Failure to repay the loan according to these terms could result in loss of your home through foreclosure.
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I am currently living outside of the U.S. Can I get a VA loan for a home outside of the country?
The VA is only legally allowed to guarantee loans on property in the United States, its territories, or its possessions.
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Can I get a VA loan if I have had a bankruptcy?
Your lender needs to consider many things regarding a past bankruptcy and your overall credit-worthiness. Depending on your specific situation, the bankruptcy may or may not prevent you from getting a VA loan. Three important items your lender will consider include:
- How long ago the bankruptcy was
- Whether or not you have re-established satisfactory credit
- The circumstances which caused the bankruptcy
Discuss any concerns with your lender as soon as possible. That way you can work together to address any issues that may come up.
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What is the VA Funding Fee and why do I have to pay it?
The VA Funding Fee is required by law on a VA guaranteed loan. It enables you to contribute to the cost of this benefit, reducing the cost to taxpayers. The VA Funding Fee can be financed into your loan amount. The funding fee may be waived in certain cases such as:
- Veteran is receiving VA compensation for service-connected disabilities
- Veteran is entitled to receive VA compensation for service-connected disabilities, but is receiving retirement pay
- Surviving spouses of veterans who died in service or from a service-connected disability
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I obtained a VA loan before. Can I get one again?
You may be able to use your eligibility again. Items that determine your eligibility include whether or not your original loan has been paid off and whether you still occupy the property or have sold it. You will need to provide documentation to the VA; your lender can assist you with this.
Your eligibility may be limited if your original VA loan was assumed, was assumed and defaulted, has not been repaid in full, or if the property was foreclosed upon. |
I’ve used my benefit before and this time my VA Funding Fee is higher. Why?
The Funding Fee may be higher the second time around if your down payment is under 5%. The reasoning behind this is that you have had a chance to use your benefit already and that you have had time to build equity in your home or save money for a down payment. The VA has specific tables for calculating your Funding Fee. Your lender can assist you with them. |
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Do I need to occupy the property I purchase with a VA loan?
Yes. The law requires you to certify that you intend to occupy it as your home. You then need to occupy it at time of closing or within a short time thereafter. If you are stationed overseas and you are married, your spouse may occupy the house in your place. The law does not allow other relatives, such as your parents or siblings, to occupy the house in your place, if you are single. Only a spouse may do so.
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Can a veteran and a non veteran (who is not a spouse) apply for a VA loan together?
Yes, but the guaranty will be adjusted to cover only the veteran’s portion of the loan. Other requirements, such as down payment, may be stricter. Consult with your lender to determine if this is the best option for you or if you might be better off looking at different loan programs.
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I am not a veteran, but my spouse is a deceased veteran. Am I eligible for the home loan benefit?
The surviving spouse of a veteran who died in active duty or as a result of a service-connected disability may be eligible for the benefit if he or she has not re-married. Specific regulations regarding re-marriage are in place and may or may not impact your eligibility. It is important to note that eligibility does not extend to children of the deceased. Also, if you obtained a VA loan with your spouse before your spouse’s death, you may be eligible for an interest rate reduction refinance loan.
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If the veteran dies, will the VA guaranty pay off the balance of the loan?
No. The surviving spouse/co-borrower must continue to make payments on the loan. If no co-borrower exists, it becomes the obligation of the veteran’s estate. You may wish to adjust your life insurance policy or purchase mortgage life insurance to provide for this situation. If you wish, your lender can recommend a reputable insurance provider.
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