What is a VA Loan?

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.

How to get a VA Loan

The Application Process

The application process for VA financing is no different from any other type of loan. In fact, the VA application form is the same as that used for HUD/FHA and conventional loans. The mortgage lender verifies the applicant's income and assets, and obtains a credit report to see that other obligations are being paid on time. If all is well and the appraised value of the property is enough to cover the loan needed, the lender, in most instances, can then close the loan under VA's automatic procedure. Only about 10 percent of VA loan applications have to be submitted to a VA office for approval before closing.

Requirements for Loan Approval

To obtain a VA loan, the law requires that:

1. The applicant must be an eligible veteran who has available entitlement.
2. The loan must be for an eligible purpose.
3. The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.
4. The veteran must be a satisfactory credit risk.
5. The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.

One of our experienced mortgage lenders will be able to discuss specific income and other qualifying requirements.

Advantages of a VA Loan

• Equal opportunity for all qualified veterans to obtain a VA loan.
• No downpayment (unless required by the lender or the purchase price is more than the reasonable value of the property).
• Buyer informed of reasonable value.
• Negotiable interest rate.
• Ability to finance the VA funding fee (plus reduced funding fees with a downpayment of at least 5% and exemption for veterans receiving VA compensation).
• Closing costs are comparable with other financing types (and may be lower).
• No mortgage insurance premiums.
• An assumable mortgage.
• Right to prepay without penalty.
• For homes inspected by VA during construction, a warranty from builder and assistance from VA to obtain cooperation of builder.
• VA assistance to veteran borrowers in default due to temporary financial difficulty.

Military Service Requirements for VA Loan Eligibility

*NOTE: Applications involving other than honorable discharges will usually require further development by VA. This is necessary to determine if the service was under other than dishonorable conditions.

• Wartime - Service during:	WWII	09/16/40 to 07/25/47
  	Korean	06/27/50 to 01/31/55
  	Vietnam	08/05/64 to 05/07/75

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.

• Peacetime - Service during periods:		07/26/47 to 06/26/50
  		02/01/55 to 08/04/64
  		05/08/75 to 09/07/80 (enlisted)
  		to 10/16/81 (officer)

You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions. If you served less than 181 days, you may be eligible if discharged for a service connected disability.

Service after 09/07/80 (enlisted) or 10/16/81 (officer)

If you were separated from service which began after these dates, you must have:

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

(b) Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early out), or have been determined to have a compensable service-connected disability;

(c) Been discharged with less than 181 days of service for a service-connected disability. Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.

Gulf War - Service during period 08/02/90 to date yet to be determined

If you served on active duty during the Gulf War, you must have:

(a) completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable; or

(b) completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early out), or have been determined to have a compensable service-connected disability, or

(c) been discharged with less than 90 days of service for a service-connected disability. Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

Active Duty Service Personnel

If you are now on regular active duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.

Selected Reserves or National Guard

If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and

(a) were discharged with an honorable discharge; or

(b) were placed on the retired list; or

(c) were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service; or

(d) continue to serve in the Selected Reserves.

Individuals who completed less than 6 years may be eligible if discharged for a service- connected disability. Eligibility for Selected Reservists expires 09/30/2007.

You may also be determined eligible if you:

(a) are an unremarried spouse of a veteran who died while in service or from a service connected disability, or

(b) are a spouse of a serviceperson missing in action or a prisoner or war.

Eligibility may also be established for:

(a) certain United States citizens who served in the armed forces of a government allied with the United States in WWII.

(b) individuals with service as members in certain organizations, such as Public Health Service officers, cadets/midshipmen at service academies, officers of National Oceanic and Atmospheric Administration, merchant seamen with WWII service, and others.

What a VA Loan can be used for

You may use VA-guaranteed financing:

• To buy a home.
• To buy a townhouse or condominium unit in a project that has been approved by VA.
• To build a home.
• To repair, alter, or improve a home.
• To simultaneously purchase and improve a home.
• To improve a home through installment of a solar heating and/or cooling system or other energy efficient improvements.
• To refinance an existing home loan.
• To refinance an existing VA loan to reduce the interest rate and add energy efficiency improvements.
• To buy a manufactured (mobile) home and/or lot.
• To buy and improve a lot on which to place a manufactured home which you already own and occupy.
• To refinance a manufactured home loan in order to acquire a lot.

What a VA Loan cannot be used for

You may NOT use VA-guaranteed financing:

• As a business loan.
• To purchase a farm (except for a farm on which there is a farm residence which will be personally occupied by the veteran as a home).
• To purchase a cooperatively owned apartment.
• To purchase property in a foreign country.

6 Steps to Obtaining a VA Loan

1. Find the property suitable for your needs.
2. Go to a lender, and apply for the loan.
3. Present your discharge or separation papers relating to latest period of service and/or a Certificate of Eligibility.
4. Property is appraised by approved appraiser.
5. Estimate of property's reasonable value is determined.
6. If application is approved, you get the loan.