Loan Programs & Plans

(ii) Veterans Affairs ( VA )
A VA (Veterans Affairs) loan carries many of the same advantages as an FHA home loan. However, to qualify for this loan, you must be a qualifying veteran, the unmarried widow of a veteran, a Public Health Service Officer, or an active-duty serviceman. The maximum loan amount for a VA-guaranteed loan is $240,000. However, if you can make a large down payment, VA is now considering loan amounts above $240,000. Generally, you would need to put down 25% of the value exceeding $240, 00, and you can’t exceed conventional loan limits. No down payment is required for most VA loans below $240,000. VA loans are guaranteed by U.S. Dept. of Veterans Affairs. The guaranty allows veterans and service persons to obtain home loans with favorable loan terms, usually without a down payment. In addition, it is easier to qualify for a VA loan than a conventional loan. The U.S. Department of Veterans Affairs does not make loans, it guarantees loans made by lenders. 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. VA-guaranteed loans are obtained by making application to private lending institutions.

Why a VA Loan?

The more you know about our home loan program, the more you will realize how little "red tape" there really is in getting a VA loan. These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer's loan can be processed and closed by the lender without waiting for VA's approval of the credit application.

Additionally, if the lender is approved under VA's Lender Appraisal Processing Program (LAPP), the lender may review the appraisal completed by a VA-assigned appraiser and close the loan on the basis of that review. The LAPP process can further speed the time to loan closing.

What is a VA-Guaranteed Loan?

These loans are made by a lender, such as a mortgage company, savings and loan or bank. VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn't previously used the benefit may be able to obtain a VA loan up to $240,000 depending on the borrower's income level and the appraised value of the property. The local VA office can provide more details on guaranty and entitlement amounts.

Five easy steps to a VA Loan

* Apply for a Certificate of Eligibility.
A veteran who doesn't have a certificate can obtain one easily by completing VA Form 26-1880, Request for a Certificate of
Eligibility for VA Home Loan Benefits and submitting it to one of our Eligibility Centers with copies of your most recent
discharge or separation papers covering active military duty since September 16, 1940, which show active duty dates and
type of discharge.

* Decide on a home the buyer wants to buy and sign a purchase agreement

* Order an appraisal from VA. (Usually this is done by the lender.)
Most VA regional offices offer a "speed-up" telephone appraisal system. Call the local VA office for details.

* Apply to a mortgage lender for the loan.
While the appraisal is being done, the lender (Mortgage Company, savings and loan, bank, etc.) can be gathering credit
and income information. If the lender is authorized by VA to do automatic processing, upon receipt of the VA or LAPP
appraised value determination, the loan can be approved and closed without waiting for VA's review of the credit
application. For loans that must first be approved by VA, the lender will send the application to the local VA office, which
will notify the lender of its decision.

* Close the loan and the buyer moves in.

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