A: There is no limit on the size of a VA guaranteed home loan, provided that the veteran is qualified for the loan from a credit and income standpoint. However, as a practical matter, lenders will generally limit the maximum loan amount to 4 times the amount of the veteran's available entitlement plus any downpayment. Currently, the maximum entitlement on loans above $144,000 is $50,750, which will support a no downpayment loan of up to $203,000.
A: The VA funding fee is required by law. The fee, currently 2 percent on no downpayment loans, is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. The funding fee for second time users who do not make a downpayment is 3 percent. The idea of a higher fee for second time use is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a downpayment. Second time users who make a downpayment of at least 5 percent pay a reduced funding fee of 1.5 percent, the same as first time users making the same downpayment. For a 10 percent downpayment, the fee drops to 1.25 percent. The effect of the funding fee on a veteran's financial situation is minimized since the fee may be financed in the loan.
A: The law requires that you certify that you intend to occupy the property as your home. This requirement is considered satisfied if you actually intend to occupy the property as your home and in fact so occupy it when the loan is closed or within a reasonable time afterward.
A: The law specifically provides that occupancy by the veteran's spouse satisfies the personal occupancy requirement. The law makes no provision for occupancy by other close relatives as a substitute for personal occupancy by the veteran.
A: A veteran who has paid off the prior VA loan and disposed of the property can have his or her entitlement restored for additional use. To obtain restoration of entitlement, the veteran must send VA a completed VA Form 26-1880, along with evidence that the property has been disposed of and the loan repaid in full. This evidence can be in the form of a pay-off statement from the former lender, or a copy of the HUD-1 settlement statement completed in connection with the sale of the property. The application can be presented to any VA Regional Office. A veteran can also obtain restoration of entitlement, on a one-time basis, if the prior VA loan has been paid in full but the property has not been sold.
A: In this case the veteran's entitlement can be restored only if the assumer is also an eligible veteran who is willing to substitute his or her entitlement for that of the original veteran. Otherwise, the original veteran cannot have entitlement restored until the assumer has paid off the VA loan.
A: Although the veteran's debt was waived by VA, the Government has still suffered a loss on the loan. The law does not permit the veteran's entitlement to be restored until the loss has been repaid in full.
A: Although the VA fee appraiser must view the property from both the exterior and interior to determine its overall condition, the appraisal process is not intended to be an "inspection" of the property. While the appraiser is an experienced observer, and is required to recommend needed repairs based upon his or her observations while completing the appraisal, the appraiser is not expected to recommend cosmetic repairs, ensure that mechanical, electrical and plumbing systems work properly, climb on the roof, etc. VA cannot guarantee that all defective conditions will be seen by the appraiser, or that the property will otherwise be satisfactory to the buyer in all respects, and we have no authority to assist veteran homeowners with the correction of defects in existing homes. VA encourages homebuyers to satisfy themselves that the home they intend to purchase is in a condition that is acceptable to them.
A: If the new home was inspected by a fee compliance inspector assigned by VA or HUD during construction, VA has complaint processing procedures that are used to attempt to get the builder to correct construction defects which the VA determines are the builder's responsibility. A complaint must be registered with VA within the first year of ownership. Ultimately, VA does not have the authority to force a builder to make corrections to a property. Also, some problems about which a veteran complains may be determined by VA to be within minimum standards of acceptable building practice. In such cases, VA will not look to the builder for correction. However, when builders refuse to correct items which VA determines are their responsibility to correct, VA will take administrative sanctions against them and refuse to do further business with them. In the end, some veterans may still need to look to the legal system to get acceptable redress from the builder.
A: No. The surviving spouse or other co-borrower must continue to make the payments. If there is no co-borrower, the loan becomes the obligation of the veteran's estate. Mortgage life insurance is available but must be purchased from private insurance sources.
A: No. A veteran may sell the property to a veteran or nonveteran at any time. However, if the loan was closed after March 1, 1988, and it will be assumed, the qualifications of the assumer must be reviewed and approved by the lender or VA.
A: No. If the loan was closed after March 1, 1988, the lender or VA must be notified and requested to approve the assumer and grant the veteran release from liability. If the loan was closed prior to March 1, 1988, the loan may be assumed without approval from VA or the lender. However, the veteran is strongly encouraged to request a release of liability from VA in order to avoid owing a debt to the Government if the loan assumer (or a subsequent assumer) fails to pay the loan.
A: No. The assumer must not only qualify from a credit and income standpoint and meet occupancy requirements, but he or she must have sufficient entitlement to substitute for that used by the original veteran in obtaining the loan.
A: It is best to talk with the lender as soon as possible to explain why the payments are late and when and how those late payments will be made. If there was a job loss, divorce, or other serious problem, and the regular monthly payments cannot be made, then it may be best to sell the home to avoid foreclosure. VA may be able to assist in arranging a repayment plan or other alternative to foreclosure. VA offers home loan counseling through 46 of its regional offices, and a veteran can call the toll-free number (800-827-l000) for the nearest office to request a call-back from a Loan Service Representative.
A: When VA refunds a loan, the loan is purchased from the private lender. VA only refunds a loan when the veteran has had problems making the payments due to circumstances beyond his or her control, the problems have improved so that payments can now be made or will be in the near future, but the loan holder is not willing to wait before taking action to terminate the loan. Refunding is rare because most lenders prefer to work out the problems, if at all possible, rather than selling the loan to VA and thereby giving up the right to future income from that loan.
A: When a veteran attempts to sell his or her home and the expected proceeds from the sale are not enough to pay off the existing loan, and the veteran has no other source of funds to complete the transaction, a VA compromise claim pays the difference. As with any claim payment by VA, the veteran usually remains liable to VA for the amount of the claim payment. However, the compromise claim is usually less than the claim which would have been payable if the sale had fallen through, the veteran had failed to make the loan payments, and the lender had foreclosed on the loan.
A: The best way is to contact a local broker who participates in the VA sales program (all licensed brokers are eligible). It is VA's policy to utilize the services of local real estate brokers to sell the properties. Brokers have the responsibility of showing our properties to prospective purchasers and preparing purchase offers. Participating brokers receive instructional material regarding our sales program and are familiar with our sales procedures. VA pays the sales commission.
A: No, all VA properties are available for sale to both veterans and nonveterans.
A: No. VA manages and sells acquired properties through its 46 regional offices. Our offices either issue sales listings by direct mail, and/or advertise their listings in local newspapers. In addition, the offices maintain computer bulletin boards that list all properties available for sale within their jurisdiction.
A: Yes, vendee financing (i.e., seller-financing) is available for most, but not all, property sales. With vendee financing the downpayment requirements are usually very reasonable, and the interest rate is established by VA based on market conditions. Any prospective purchaser who requests VA financing to purchase a VA-owned property must have sufficient income to meet the loan payments, maintain the property and pay all taxes, insurance, utilities and other obligations. The purchaser must also have enough funds remaining for family support.
This information was obtained from the Veteran's Administration home page.