What is a VA
Loan?
Who Is eligible
for a VA Loan?
What type of
home can I buy
with a VA Loan?
How do I apply
for a VA
guaranteed loan?
I have already
obtained one VA
loan. Can I get
another one?
What are the
benefits of a VA
Loan?
What are the
negatives of a
VA Loan?
What is a VA Loan?
The VA Loan began in
1944 through the
original
Servicemen's
Readjustment Act,
also known as the GI
Bill of Rights. The
GI Bill was signed
into law by
President Franklin
D. Roosevelt and
provided veterans
with a federally
guaranteed home with
no down payment.
This feature was
designed to provide
housing and
assistance for
veterans and their
families, and the
dream of home
ownership became a
reality for millions
of veterans. VA
guaranteed loans are
made by private
lenders, such as
banks, savings &
loans, or mortgage
companies to
eligible veterans
for the purchase of
a home, which must
be for their own
personal occupancy.
The guaranty means
the lender is
protected against
loss if you or a
later owner fails to
repay the loan. The
guaranty replaces
the protection the
lender normally
receives by
requiring a down
payment allowing you
to obtain favorable
financing terms.
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Who
is eligible for a VA
Loan?
Wartime/Conflict
Veterans
Wartime/Conflict
Veterans who were
not dishonorably
discharged, and
served at least 90
days:
-
World War II - September 16, 1940 to July 25, 1947
-
Korean Conflict - June 27, 1950 to January 31,
1955
-
Vietnam Era
- August 5, 1964
to May 7, 1975
-
Persian Gulf War - Check with VA regional office
for specific
eligibility.
-
Afghanistan and
Iraq - Check the
VA's Web site
for eligibility
guidelines for
current service
in Afghanistan
and Iraq.
Peacetime Service
Peacetime service of
at least 181 days of
continuous active
duty with no
dishonorable
discharge. If you
were discharged
earlier due to a
service-connected
disability, you
should speak with
the regional VA
office to verify
eligibility.
-
July 26, 1947 to June 26, 1950
-
February 1, 1955 to August 4, 1964, or
-
May 8, 1975 to September 7, 1980 (enlisted) or to
October 16, 1981
(officer)
-
Enlisted veterans whose service began after
September 7,
1980, or
officers whose
service began
after October
16, 1981, must
normally have
served at least
two years.
Reserves and
National Guard
Members who have
completed six years
of service and have
been honorably
discharged (or are
still serving) may
be eligible for a VA
loan. Contact your
regional VA office
for more details.
Other Qualifying
Service
Other types of
service that may
make you eligible
for a VA loan:
-
Certain US citizens who served in the armed forces
of a government
allied with the
United States
during World War
II.
-
Surviving spouses of eligible persons who died as
the result of
service or
service-connected
injuries. The
surviving spouse
must not have
remarried.
-
The spouse of any member of the Armed Forces
serving on
active duty who
has been listed
as a prisoner of
war or missing
in action for
more than 90
days.
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What
type of home can I
buy with a VA loan?
A VA home loan must
be used to finance
your personal
residence within the
United States or its
territories, but you
have many choices
regarding the type
of home you
purchase.
-
Existing single family home.
-
Townhouse or condo in a VA-approved project.
-
New construction residence.
-
A manufactured home and/or lot.
-
Home refinances. Certain types of home
improvements.
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How do I apply for a
VA guaranteed loan?
You can apply for a
VA loan with any
mortgage lender that
participates in the
VA home loan
program. At some
point, you will need
to get a Certificate
of Eligibility from
VA to prove to the
lender that you are
eligible for a VA
loan. You can apply
for a Certificate of
Eligibility by
submitting a
completed
VA Form 26-1880,
Request For A
Certificate of
Eligibility For Home
Loan Benefits, to
one of the
VA Eligibility
Centers, along
with proof of
military service. In
some cases it may be
possible for VA to
establish
eligibility without
your proof of
service. However, to
avoid any possible
delays, it's best to
provide such
evidence.
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I have already
obtained one VA
loan. Can I get
another one?
Yes, your
eligibility is
reusable depending
on the
circumstances.
Normally, if you
have paid off your
prior VA loan and
disposed of the
property, you can
have your used
eligibility restored
for additional use.
Also, on a one-time
only basis, you may
have your
eligibility restored
if your prior VA
loan has been paid
in full but you
still own the
property. In either
case, to obtain
restoration of
eligibility, the
veteran must send VA
a completed VA Form
26-1880 to one of
the VA Eligibility
Centers. To prevent
delays in
processing, it is
also advisable to
include evidence
that the prior loan
has been paid in
full and, if
applicable, the
property disposed
of. This evidence
can be in the form
of a paid-in-full
statement from the
former lender, or a
copy of the HUD-1
settlement statement
completed in
connection with a
sale of the property
or refinance of the
prior loan.
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What are the
benefits of a VA
Loan?
-
100% financing, no down payment loans are common.
-
No Private Mortgage Insurance (PMI).
-
No penalties if you prepay the loan.
-
Competitive interest rates.
-
Loan qualification is sometimes easier than if you
were applying
for a
conventional
loan.
-
Sellers can pay all closing costs.
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What are the
negatives of a VA
Loan?
-
VA loans made prior to March 1, 1988, can be
assumed with no
qualifying of
the new buyer.
If a buyer of
such a property
defaults, the
veteran
homeowner may be
liable for
funds.
-
Some sellers may be hesitant to work with someone
who is acquiring
a VA loan
because of their
past reputation
of taking longer
to process than
conventional
loans. While the
time may still
be a little
longer, getting
a VA loan is not
the lengthy
ordeal it once
was.
-
Sellers are often asked to pay a portion of
closing costs,
so they may not
be eager to
negotiate the
sales price of
the home.
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