VA Guaranteed Home Loans for Veterans

Buying a House? Refinancing? You Earned Them - Use Your VA Benefits

The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is competitive with the rate charged on other type of mortgage loans. For VA housing loan purposes, the term "veteran" includes certain members of the Selected Reserve, active duty service personnel and certain categories of spouses.

6 Steps in Arranging a Veteran's Guaranteed Loan

• Find the property suitable for your needs.

• Go to a lender, and apply for the loan.

• Present your discharge or separation papers relating to latest period of service and/or a Certificate of Eligibility.

• Property is appraised by approved appraiser.

• Estimate of property's reasonable value is determined.

• If application is approved, you get the loan.

What VA Can Do
VA loans offer the following important advantages over most conventional loans:

• Ensure that all veterans are given an equal opportunity to buy homes with VA assistance, without regard to their race, color, religion, sex, handicap, familial status or national origin.

• No downpayment (unless required by the lender, the purchase price is more than the reasonable value of the property as determined by VA, or the loan is made with graduated payment features);

• A negotiable fixed interest rate competitive with conventional mortgage interest rates;

• The buyer is informed of the estimated reasonable value of the property;

• Limitations on closing costs;

• An assumable mortgage. However, for loans closed on or after March 1, 1988, the assumption must be approved in advance by the lender or VA. Generally, this involves a review of the creditworthiness of the purchaser (ability and willingness to make the mortgage payments). Be sure to see the section entitled "Loan Repayment Terms";

• Long amortization (repayment) terms;

• Right to prepay without penalty (lenders may require that any partial prepayments be in the amount of at least 1 monthly installment of principal or $100, whichever is less);

• For houses inspected by VA during construction, a warranty from the builder and VA assistance in trying to obtain the builder's cooperation in correcting any justified construction complaint;

• Forbearance (leniency) extended to worthy VA homeowners experiencing temporary financial difficulty.

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What VA Cannot Do
Guaranty that the house you buy, whether it is new or previously occupied, will be free of defects. The VA appraisal is NOT intended to be an "inspection" of the property. If you have any doubts about the condition of the house, it is in your best interest to seek expert advice BEFORE you legally commit yourself in a purchase agreement. Most sellers will permit you, at your expense, to arrange for an inspection by a qualified residential inspection service and negotiate with you concerning repairs to be included in the purchase agreement. Such action can prevent later problems, disagreements and disappointments. Remember, VA guarantees only the loan, NOT the condition of the property. It is your responsibility to be an informed buyer and assure yourself that what you are buying is satisfactory to you in all respects.

If you have a home built, VA cannot compel the builder to correct construction defects or otherwise live up to the contract. VA authority is limited to suspension of the builder from participation in the VA Loan Guaranty program.

VA cannot guarantee that you are making a good investment, or that you can resell the house at the price you paid.

VA does not have authority to provide you with legal services.

The Veteran's Administration Insures VA Loans, Get One Today!

Requirements for VA Loan Approval
To get a VA loan, the law requires that:

• You must be an eligible veteran who has available home loan entitlement (except in the case of an interest rate reduction refinancing loan - see 'Interest Rates' on page 18);

• The loan must be for an eligible purpose;

• You must occupy or intend to occupy the property as your home within a reasonable period of time after closing the loan;

• You must have enough income to meet the new mortgage payments on the loan, cover the costs of owning a home, take care of other obligations and expenses, and still have enough income left over for family support (a spouse's income is considered in the same manner as the veteran's); and

• You must have a good credit record.

The Guaranty
VA guaranteed loans are made by private lenders such as banks, savings and loan associations, or mortgage companies. To get a loan, you apply to the lender. If the loan is approved, VA guarantees the loan when it is closed. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan.

Service Eligibility
You are eligible for VA financing if your service falls within any of the following categories:

Wartime Service. If you served any time during:

• 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), or

• Persian Gulf War (August 2, 1990 to present (requires service for 2 years or the full period for which called to active duty, except that exceptions applying to service between September 7, 1980 and August 1, 1990 also apply to Persian Gulf War.)),

You must have served at least 90 days on active duty and been discharged or released under other than dishonorable conditions. If you served less than 90 days, you may be eligible if discharged because of a service-connected disability.

Peacetime Service. If your service fell entirely within any one of the following periods:

• July 26, 1947 to June 26,1950,

• February 1, 1955 to August 4, 1964, or

• May 8, 1975 to September 7, 1980 (if enlisted) or to October 16, 1981 (if officer), you must have served at least 181 days of continuous active duty and been discharged or released under conditions other than dishonorable. If you served less than 181 days, you may be eligible if discharged because of a service-connected disability.

Service between September 7, l980 (enlisted) or October 16,1981 (officer) and August 1, 1990.

If your entire period of service was between 9/7/80 (10/16/81) and 8/1/90, you must have:

• Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were called or ordered to active duty, and been discharged or released under conditions other than dishonorable.

• You may also be determined eligible if you were discharged for a service-connected disability, or you were discharged for the convenience of the government after completing at least 20 months of a 2-year enlistment,

• or you completed 181 days of active duty and:
  

  • were discharged because of a hardship, or
    

  • were determined to have a service connected, compensable disability, or
    

  • were discharged or released from active duty for a medical condition which preexisted service and has not been determined to be service connected, or
    

  • received an involuntary discharge or release from active duty for the convenience of the Government as a result of a reduction in force, or
    

  • were discharged or released from active duty for a physical or mental condition not characterized as a disability and not the result of misconduct but which did interfere with your performance of duty.

Note: During the Persian Gulf War, the foregoing exceptions to the 2-year requirement apply, except that 90 days of active duty is sufficient in lieu of 181 days.

Active Duty Service Personnel. If you are now on active duty, you are eligible after having served on continuous active status for at least 90 days. When an ending date is established for Persian Gulf War service, a minimum of 181 days of continuous active duty will be required for persons who did not have wartime service.

Members of the Selected Reserve. Individuals who are not otherwise eligible and who have completed at least 6 years in the Reserves or National Guard, or been discharged because of a service-connected disability, and (1) have been discharged under honorable conditions, or (2) have been placed on the retired list, or (3) have been transferred to an element of the Ready Reserve other than the Selected Reserve, or (4) continue to serve in the Selected Reserve are eligible for a GI loan. (Eligibility for members of the Selected Reserve expires September 30, 2007.)

Other Types of Service

• Certain United States citizens who served in the armed forces of a government allied with the United States in World War II.

• Unremarried surviving spouses of the above described eligible persons who died as the result of service or service-connected injuries. (Children of deceased veterans are not eligible.)

• The spouse of any member of the Armed Forces serving on active duty who is listed as missing in action, or is a prisoner of war and has been so listed for a total of more than 90 days.

• Individuals with service as members in certain other organizations, services, programs and schools may also be eligible. Questions about whether this service qualifies for home loan benefits should be referred to the Loan Guaranty Division of the nearest VA regional office.

Obtaining a Certificate of Eligibility

VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan.

Should you need to request a certificate from VA, you must complete VA Form 26-1880, Request For A Certificate of Eligibility For VA Home Loan Benefits and submit it to one of our VA Eligibilty Centers along with acceptable proof of service as described on the instruction page of the form.