VETERANS ADMINISTRATION (VA) LOANS

VA Loan benefits are currently available for veterans of U.S. military service who received an honorable discharge and who served during the following time periods (these eligibility standards occasionally change, so please check with your CTX loan officer for any updates):

1. Active duty in World War II or later periods of conflict for a period of at least ninety days
2. Veterans with service only during peacetime periods with more than one hundred-eighty days of active service.
3. Veterans whose service began after September 7, 1980 or officers with service beginning after October 16, 1981, with at least twenty-four months’ active service.
4. Members of the Selected Reserve, including the National Guard, who were activated on or after August 2, 1990, and served at least ninety days

Also, the veteran will need to present to the Lender a Certificate of Eligibility, which can be obtained by submitting form 26-1880 (Request for Determination and Available Loan Guaranty Entitlement) to the nearest VA regional office. A veteran who has previously used his or her VA entitlement may request that the VA restore it to purchase another home as long as:

1. The prior VA loan has been paid in full and the property sold;
2. A qualified veteran buyer agrees to buy the home, assume the VA loan and substitute his or her entitlement for the same amount originally used by the veteran seller; and
3. The loan is paid in full but the property is not sold. The veteran may have a one-time-only restoration of eligibility.

If there are concerns or questions on eligibility, please contact the nearest VA regional office.

The process to obtain a VA loan is not that much different than any other loan. The lender reviews the veteran’s Certificate of Eligibility, completes the application, verifies the veteran’s credit, asset, income and debt information, and reviews the appraisal. However, there is a difference in the appraisal process. A VA appraiser assigned by the nearest VA office must appraise the home under specific guidelines set by VA and at specific fee levels approved by VA, and must issue a CRV (Certificate of Reasonable Value). In some cases, especially where the Certificate of Reasonable Value indicates a home value too low to support the loan amount the veteran applied for, then the lender must submit the loan application to the nearest VA office for a loan decision.

There may be a little more involved in the lending process for a VA loan, but here are some of the benefits for a veteran:

1. In most cases, there is little or no down payment.
2. Subject to certain limits, VA offers to guarantee the loan to the lender without a monthly mortgage insurance payment by the veteran. However, where one or more of the borrowers (other than the veteran) is not a veteran or the spouse of the borrowing veteran, this VA guarantee applies only to a veteran’s portion of a loan.
3. There are limits on the amount of closing costs and which party to the transaction can pay the closing costs associated with a VA loan.
4. There are specific appraisal (CRV) requirements designed to protect the veteran (however, this is not a guarantee of value or that the home is free of defects).
5. VA loans may generally be assumed, meaning that the veteran may be able to sell the home with the VA loan intact, subject to VA’s approval of the assuming party’s credit, income and debt.
6. VA provides counseling to the veteran during the life of the loan, especially during times of financial difficulties.
7. VA loans do not have prepayment penalties.
8. There are a number of different VA loan programs with a choice of repayment plans.

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