VA Home Loan Basics

Application Steps

There are four basic steps in the VA home loan application process.

Step 1: Select a Lender

A lender can help you review your financial situation and credit history and determine the loan amount you qualify for. Choose a lending institution that is VA approved and can handle home loans

Step 2: Select a Home

Select a home and discuss the purchase with the seller or selling agent. Sign a purchase contract conditioned on approval of your VA home loan. Present your Certificate of

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Reusing Your VA Home Loan Benefit

The VA home loan benefit can be reused if you have paid off your prior VA loan and sold the property.

In addition, you may, on a one-time-only basis, be able to reuse or restore your benefit eligibility if your prior VA loan has been paid in full and you still own the property.

In either case, to restore your eligibility, you must send a completed VA Form 26-1880 to your VA Eligibility Center.

To prevent delays in processing, you should also include

Reusing Your VA Home Loan Benefit2020-05-22T13:08:19-07:00

Refinancing with a VA Home Loan

You can use your VA home loan benefit to refinance your existing VA home loan to a lower interest rate, with little or no out-of-pocket cost. This is called an Interest Rate Reduction Refinancing Loan (IRRRL), also known as a “rapid refinance” or a “streamline refinance.”

Generally, no appraisal, credit information, or underwriting is required for this refinancing option, although some lenders may require an appraisal and credit report. The fees and charges associated with the refinancing loan may be incorporated

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Borrowing Limits

There is no maximum loan amount; however, VA does limit its guaranty.

VA loans have no loan limit any more as of January 1, 2020. If you make a down payment, your lender may loan a larger amount. While not a down payment, the guaranty often satisfies the lenders’ requirement that a portion of the home price be paid for up front (i.e. the down payment). This can save the home buyer the burden of making a down payment.

The loan maximum

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Conventional to VA Refinance

If you do not have a VA home loan, but are eligible for one, you can refinance a subprime or conventional mortgage for up to 100 percent of the value of the property. Usually you will be charged a funding fee if you are using your VA loan guaranty for the first time. Benefits to this type of refinancing are that your new interest rate may be lower and you will have no monthly mortgage insurance or out-of-pocket closing costs.

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The Cash-out Refinance Option

The Veterans’ Benefits Improvement Act of 2008 allows you to free up cash with a cash-out refinance, a VA home loan refinance program in which you can cash-out on the equity you have built up in your home. As an example, if you still owe $70,000 on your original loan, you can refinance for a $90,000 loan, which gives you a cash-out of $20,000.

An appraisal is required, and you must qualify for the loan. If you are refinancing for

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Eligibility Criteria

The major eligibility categories for a VA home loan include:

  • Veterans and service persons who have served 181 active-duty days during peacetime, unless discharged or separated from a previous qualifying period of active duty service.
  • Veterans who served during World War II, Korea, or Vietnam, if they served for 90 days and were honorably discharged.
  • If you have served for any period since August 2, 1990, you can also qualify if you have served 24 months of continuous active duty,
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Eligibility Details

  • WWII: 9/16/1940 to 7/25/1947
  • Korean: 6/27/1950 to 1/31/1955
  • Vietnam: 8/5/1964 to 5/7/1975

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

  • 7/26/1947 to 6/26/1950
  • 2/1/1955 to 8/4/1964
  • 5/8/1975 to 9/7/1980 (Enlisted)
  • 5/8/1975 to 10/16/1981 (Officer)

You must have served at least 181 days of continuous active duty and been discharged under other than

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Reasons to Consider a VA Loan

  • No down payment required
  • VA funding fee may be financed in the loan
  • VA Loans do not require perfect credit –there is no credit score cut-off
  • VA funding fees may be waived for Veterans with service-connected disabilities and surviving spouses of Veterans with service-connected disabilities
  • Closing costs may be shared between the buyer and lender
  • Flexible mortgage types – fixed, hybrid and traditional ARMs
  • No mortgage insurance premiums – this is huge in today’s housing market
  • VA guaranteed mortgages
Reasons to Consider a VA Loan2020-05-22T14:27:06-07:00
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