Eligible borrowers: Any veteran is eligible for VA home loan benefits if he or she (1) is currently on active duty in the Army, Navy, Air Force, Marine Corps, or Cost Guard (2) served after September 15, 1940 in the Army, Navy, Air Force, Marine Corps, or Coast Guard and was honorably discharged (3) is currently a member of the Reserves or Air National Guard, or (4) was honorably discharged from the Reserves or Air National Guard. There is a length of service requirement in each category. VA determines eligibility and issues a Certificate of Eligibility which certifies veteran’s available entitlement. All borrowers must occupy the property; VA does not allow non-occupant co-borrowers. The only co-borrower allowed by VA is a spouse or another veteran.
Eligible properties: Single family residences (including Private Unit Developments), condominiums/townhomes (project must be either VA or FHA approved, VA does not allow “spot” approvals), and 2-4 unit properties are eligible for VA financing. Vacation homes and investment properties are not allowed. VA appraisers are assigned by VA (not the lender). Any “health and safety” issues must be corrected prior to closing. Termite reports are required; all Section 1 items must be cleared and all Section 2 items must be cleared if they pertain to “healthy and safety”. The veteran is allowed to pay for termite repairs.
Federal insurance: All VA loans are federally insured. VA currently charges a 2.15% up-front funding fee for any veteran using his benefits for the first time. Subsequent use fee is 3.30%. The funding fee is a one-time charge that can be paid at closing, or added to the loan amount and financed over the life of the loan. The funding fee is waived if the veteran was service disabled. There is no monthly mortgage insurance.
Loan amount: The maximum “conventional” VA loan amount is $417,000. The maximum “high balance” loan amount is $1,000,000.
Down payment: For loan amounts up to $417,000 VA does not require a down payment; VA allows financing for 100% of the purchase price. For loan amounts in excess of $417,000 the borrower is required to make a down payment equal to 25% of the difference between the purchase price and $417,000. For example, a purchase price of $550,000 would require a down payment of $33,250 (i.e. $550,000 – $417,000 = $133,000 x 25% = $33,250). The entire down payment can be “gifted” from a family member.
Closing costs: Buyer/borrower is allowed to pay up to 1% origination fee to the lender, “reasonable” discount points, appraisal, title insurance policy, county recording fee, property tax and insurance impounds/reserves. The buyer/borrower isnot allowed to pay any other lender’s fees (except 1% origination), any other title fees (except the title policy itself), any escrow fees, any real estate agent fees, or any other miscellaneous fees (such as notary, messenger, FedEx). All these “non-allowable” fees must be paid be either the seller or the lender.
Seller credit: Seller may credit buyer an amount equal to all of the buyer’s “allowable” non-recurring closing costs (as detailed above). There is no maximum; seller can pay all costs with no limitation. If seller pays other costs such as the VA funding fee, property tax, insurance, accrued interest, or, pays off credit card balances on behalf of the buyer, these seller concessions cannot exceed 4% of the purchase price.
Credit score: Minimum credit score is 620 for loan amounts ≤$417,000 and 660 for loan amounts >$417,000.
For additional information regarding VA financing, please contact:
Bronwyn “Brownie” Stanisch
Senior Loan Consultant
818-681-2401 (Cell Phone)