Stewart Brown Jr – Mortgage Loan Originator – Purchase or Refinance
| Veteran’s Affairs or VA loans were introduced in 1944 as part of the Serviceman’s Readjustment Act, better known as the GI Bill of Rights Acts. This Act was introduced to help make it easier for our service men to transition from military to civilian life after the end of World War II. Signed into law by President Franklin D. Roosevelt on June 22nd of that year this legislation aimed to level the playing field in home ownership for those who risked their lives in the line of duty. The program doesn’t have a minimum credit score requirement, although most lenders require a 620 score if you plan on utilitizing 100% of your equity. In addition, you must occupy the home within 60 days of closing and occupy the property for at least 12 months before renting it out. |
| Veteran’s Affairs or VA loans were introduced in 1944 as part of the Serviceman’s Readjustment Act, better known as the GI Bill of Rights Acts. This Act was introduced to help make it easier for our service men to transition from military to civilian life after the end of World War II. Signed into law by President Franklin D. Roosevelt on June 22nd of that year this legislation aimed to level the playing field in home ownership for those who risked their lives in the line of duty. The program doesn’t have a minimum credit score requirement, although most lenders require a 620 score if you plan on utilitizing 100% of your equity. In addition, you must occupy the home within 60 days of closing and occupy the property for at least 12 months before renting it out. |
| There are several ways to meet the eligibility requirements for a Veteran’s Affairs or VA loan. To start, you should reference your DD 214 Form. This form will reflect the number of years you served in the military. You can qualify in one of four ways. One, if you were on active service duty during wartime and served for at least 90 continuous days or more. Two, you served 181 days or more of active service during peacetime. Three, you were in the National Guard or reserves for 6 years or longer. Four, you are the surviving spouse of a veteran who has died in the line of duty or as a result of a service-related disability. A Certificate of Eligibility or COE will prove to your lender that you qualify. You can obtain a COE either online or by mailing in a VA Form 26-1880 to the address listed on the VA’s website. |
| There are several ways to meet the eligibility requirements for a Veteran’s Affairs or VA loan. To start, you should reference your DD 214 Form. This form will reflect the number of years you served in the military. You can qualify in one of four ways. One, if you were on active service duty during wartime and served for at least 90 continuous days or more. Two, you served 181 days or more of active service during peacetime. Three, you were in the National Guard or reserves for 6 years or longer. Four, you are the surviving spouse of a veteran who has died in the line of duty or as a result of a service-related disability. A Certificate of Eligibility or COE will prove to your lender that you qualify. You can obtain a COE either online or by mailing in a VA Form 26-1880 to the address listed on the VA’s website. |
| VA or Veteran’s Affairs loans come in many different types. The first, is the standard VA loan which allows qualified service members to purchase a home with no minimum down payment. Next, for loans that exceed the conforming loan limits, we have VA Jumbo loans. Then we have the VA IRRRL or Interest Rate Reduction Refinance Loan which allows qualified service members the ability to move from a higher rate VA mortgage to a lower rate one or switch from an adjustable rate to a fixed rate. Then we have a VA Cash-Out Refinance which allows service members to swap out their conventional loans to a VA loan. Then we have a VA Rehab or Renovation loan that allow service members the ability to build their dream home by financing the cost of construction and improvements into their loan. Finally, there are NADL or Native American Direct Loans. |
| VA or Veteran’s Affairs loans come in many different types. The first, is the standard VA loan which allows qualified service members to purchase a home with no minimum down payment. Next, for loans that exceed the conforming loan limits, we have VA Jumbo loans. Then we have the VA IRRRL or Interest Rate Reduction Refinance Loan which allows qualified service members the ability to move from a higher rate VA mortgage to a lower rate one or switch from an adjustable rate to a fixed rate. Then we have a VA Cash-Out Refinance which allows service members to swap out their conventional loans to a VA loan. Then we have a VA Rehab or Renovation loan that allow service members the ability to build their dream home by financing the cost of construction and improvements into their loan. Finally, there are NADL or Native American Direct Loans. |
| The majority of people who qualify for a VA loan are required to pay the VA funding fee. This fee is collected by the Department of Veterans Affairs to guarantee the loan to the vendor / lender and it insures 25% of the property value should the borrower default. This funding fee ranges from 1.4 to 3.6% depending on your down payment percentage and whether you are using a first or subsequent VA loan. If you are utilizing the VA IRRRL or interest rate reduction refinance loan your funding fee will only be .5%. This fee does not have to be paid upfront, it can be rolled into your loan amount. Surviving spouses, Purple heart recipients, and veterans who receive disability are exempt from paying this funding fee on any of their VA loans. |
| The majority of people who qualify for a VA loan are required to pay the VA funding fee. This fee is collected by the Department of Veterans Affairs to guarantee the loan to the vendor / lender and it insures 25% of the property value should the borrower default. This funding fee ranges from 1.4 to 3.6% depending on your down payment percentage and whether you are using a first or subsequent VA loan. If you are utilizing the VA IRRRL or interest rate reduction refinance loan your funding fee will only be .5%. This fee does not have to be paid upfront, it can be rolled into your loan amount. Surviving spouses, Purple heart recipients, and veterans who receive disability are exempt from paying this funding fee on any of their VA loans. |
| Overall, the great thing about a VA loan is that it essentially has no loan limit. However, with the being said your specific loan limit depends on your entitlement status. So, if you have full entitlement, you don’t have a loan limit. But if your COE, certificate of eligibility, shows that you have an exisiting loan your remaining entitlement will be reduced. Therefore, it is possible to have multiple VA loans in your name. Your COE can be confusing. You will see basic entitlement and also bonus entitlement or sometimes referred to as tier 2 entitlement. Your basic entitlement will show $36,000. What this means is that if you default on a loan of $144,000 the VA will guarantee payment of 25% of the balance to your lender. Bonus entitlement covers loan amounts above $144,000. As with all other loan types, your individual loan limit will be dependent on your debt to income ratio. |
| Overall, the great thing about a VA loan is that it essentially has no loan limit. However, with the being said your specific loan limit depends on your entitlement status. So, if you have full entitlement, you don’t have a loan limit. But if your COE, certificate of eligibility, shows that you have an exisiting loan your remaining entitlement will be reduced. Therefore, it is possible to have multiple VA loans in your name. Your COE can be confusing. You will see basic entitlement and also bonus entitlement or sometimes referred to as tier 2 entitlement. Your basic entitlement will show $36,000. What this means is that if you default on a loan of $144,000 the VA will guarantee payment of 25% of the balance to your lender. Bonus entitlement covers loan amounts above $144,000. As with all other loan types, your individual loan limit will be dependent on your debt to income ratio. |
| One of the most unique things about a VA loan is that they are assumable. Yes, if you sell your property the new owner can take over your exisitng mortgage. There is a .5% closing fee on this feature. In addition, a VA loan is a lifetime benefit for veterans who qualify. Also, there is no down payment requirement, meaning 0% down is permitted. There are no prepayment penalties. In addition, outside of the initial funding fee, their is no continuing private mortgage insurance unlike all other major types of loans on the market that don’t meet down payment requirements. There are also looser credit and debt to income ratio requirements. In fact there are many veterans approved with DTI ratios in excess of 60, 70 and even some cases 80% . Finally, you may be able to finance up to $6,000 of “going green” costs with a VA EEM or energy efficient mortgage. |
| One of the most unique things about a VA loan is that they are assumable. Yes, if you sell your property the new owner can take over your exisitng mortgage. There is a .5% closing fee on this feature. In addition, a VA loan is a lifetime benefit for veterans who qualify. Also, there is no down payment requirement, meaning 0% down is permitted. There are no prepayment penalties. In addition, outside of the initial funding fee, their is no continuing private mortgage insurance unlike all other major types of loans on the market that don’t meet down payment requirements. There are also looser credit and debt to income ratio requirements. In fact there are many veterans approved with DTI ratios in excess of 60, 70 and even some cases 80% . Finally, you may be able to finance up to $6,000 of “going green” costs with a VA EEM or energy efficient mortgage. |
| The Department of Veteran’s Affairs will require proof that any home financed with a VA loan is “safe, sound, and sanitary.” Allowed property types include 1, 2, 3, and 4 unit homes, manufactured homes that are attached to the land, modular homes, PUDs or planned unit developments, and VA approved condominiums. In addition, the VA requires the following for each property: (1) safe drinking water is available from a local health authority (2) drainage directs water away from the home (3) there is private road access if the home is located in a rural area and (4) each unit has sufficient space for living, cooking, sleeping, and sanitary facilities. It’s also important to know that a VA loan can only be used on a primary residence. No second homes or investment properties are permitted. |
| The Department of Veteran’s Affairs will require proof that any home financed with a VA loan is “safe, sound, and sanitary.” Allowed property types include 1, 2, 3, and 4 unit homes, manufactured homes that are attached to the land, modular homes, PUDs or planned unit developments, and VA approved condominiums. In addition, the VA requires the following for each property: (1) safe drinking water is available from a local health authority (2) drainage directs water away from the home (3) there is private road access if the home is located in a rural area and (4) each unit has sufficient space for living, cooking, sleeping, and sanitary facilities. It’s also important to know that a VA loan can only be used on a primary residence. No second homes or investment properties are permitted. |
When you’re researching current VA mortgage rates, you’ll likely see variations from one lender to another. Interest rates differ because lenders price their loans differently. It’s helpful to have an idea of average rates over time to help understand VA loan interest rates. The historical rates below are national averages provided by a third party company.
Reach out to me for further detailed information on VA loan programs.
Guidelines for VA loans are subject to change when there are adjustments to government and lender policies, interest rate modifications, and fluctuations in the economy.
Special Situations / Non-Traditional Loan Solutions
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