VA Home Loan Learning Center

 

general information

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General info

The VA helps Servicemembers, Veterans, and eligible surviving spouses become homeowners. As part of their mission to serve you, the VA provides a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.

VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.

You will still need to have the required credit and income for the loan amount you want to borrow, but a VA home loan typically offers better terms than a traditional loan from a private bank, mortgage company, or credit union. For example, nearly 90% of VA-backed loans are made with no down payment, and...

Beginning January 1, 2020, the VA completely eliminated the county cap on VA-backed, no-down-payment loans

The first step in the VA loan process is to shop around for a lender. We make the process easy by matching you with the right lenders for rate quotes - no obligations or credit checks required.

 

benefits

No down payment / 100% Financing

One of the most valuable aspects of VA Home Loans is that they don’t require a down payment. In fact, 100% of the home’s value can be financed with a VA home loan. While veterans do need to pay a fee to the VA upon loan closing (this fee helps to keep the VA home loan program funded for other veterans in the future), the fee is less than even a minimum down payment on any other loan type. 

No PMI required

VA loans do not have any type of mortgage insurance premiums or private mortgage insurance costs. Even if the veteran purchases a home with a 0% down payment, there is no insurance cost to factor into the home’s monthly mortgage payment with a VA home loan.

Other loans require mortgage insurance premiums for any down payment of less than 20% of the home’s value. This fact alone has the potential to save veterans up to a hundred dollars a month–or more, depending on the value of the home purchased– on their mortgage payments. 

Low credit scores accepted

Typically the lowest interest rates available

Lastly, VA home loans typically have lower interest rates than do other loan types. This isn’t always the case, but in the majority of instances, eligible veterans are offered lower mortgage rates on VA loans than on conventional or FHA loans.

100% equity cash out

​Cash Out Refinance loans allow you to take cash out of your home equity to take care of concerns like paying off debt, funding school, or making home improvements.

Flexible borrower requirements

Seller can pay up to 6% of closing costs

Refinancing is easy with the VA’s streamlined refinancing

For veterans who already own homes, refinancing with a VA loan allows for the opportunity of 100% equity cash out. This is something many homeowners find to be extremely valuable, especially when it comes to saving for college or retirement, making home improvements, or even paying off higher interest debt such as credit cards or installment loans.

Even if a veteran owns a home with another loan type, he or she can refinance with a VA loan and still take advantage of being able to access up to 100% of their home’s equity. No other home loan type offers this benefit. 

Can choose between 15 or 30 year fixed-rate or adjustable home loan

Higher DTI ratios accepted

The VA will negotiate on your behalf with the lender if you are facing foreclosure

 

Eligibility

Your length of service or service commitment, duty status and character of service determine your eligibility for specific home loan benefits.

Can I get a Certificate of Eligibility for a VA direct or VA-backed home loan?

You may be able to get a COE if you didn’t receive a dishonorable discharge and you meet the minimum active-duty service requirement based on when you served.

Active-Duty

If you've served for at least 90 continuous days (all at once, without a break in service), you meet the minimum active-duty service requirements.

Veterans

The minimum active-duty service requirements depend on when you served. See the table below for more info.

If you'd like to order your own Certificate of Eligibility, you may do so online using the VA's LGY Hub linked below, or you can view our COE page for additional ways you can apply for your COE.

Persons who may qualify for VA-guaranteed loans include:

  • Veterans 

  • Certain Reserve and National Guard Members who were activated*

  • Active-duty Servicemembers 

  • Current Reserve and Guard members after six years of creditable service

  • Certain surviving spouses

  • Commissioned Officers of the PHS

  • Commissioned Officers of NOAA

 

*National Guard and Reservists are eligible if they were "activated" under the authority of Title 10 or Title 32 U.S. Code. Those with Title 32 service must have at least 30 days continuous active service.

However, you are not eligible for VA financing solely based upon Active Duty for Training in the Reserves or National Guard.


The following length-of-service requirements apply, in most cases:

Service Dates

Korean War

June 27, 1950, and January 31, 1955

Minimum Active-Duty Service Requirement

  • 90 total days, or

  • Less than 90 days if you were discharged for a service-connected disability

Post-Korean War

February 1, 1955, and August 4, 1964

  • 181 continuous days, or

  • Less than 181 days if you were discharged for a service-connected disability

Vietnam War

August 5, 1964, and May 7, 1975

Or if you served in the Republic of Vietnam
February 28, 1961, to May 7, 1975

  • 90 total days, or

  • Less than 90 days if you were discharged for a service-connected disability

Post-Vietnam War

May 8, 1975, and September 7, 1980

 

Or if you served as an officer
Between May 8, 1975, and October 16, 1981

  • 181 continuous days, or

  • Less than 181 days if you were discharged for a service-connected disability

September 8, 1980, and August 1, 1990, 

 

Or if you served as an officer
Between October 17, 1981, and August 1, 1990

  • 24 continuous months, or

  • The full period (at least 181 days) for which you were called to active duty

Gulf War to present

August 2, 1990, onwards

  • 24 continuous months, or

  • The full period (at least 90 days) for which you were called or ordered to active duty, or

  • At least 90 days if you were discharged for a hardship, a reduction in force, or for convenience of the government, or

  • Less than 90 days if you were discharged for a service-connected disability

You separated from service after September 7, 1980 onwards

 

Or after if you served as an officer

October 16, 1981 onwards

  • 24 continuous months, or

  • The full period (at least 181 days) for which you were called or ordered to active duty, or

  • At least 181 days if you were discharged for a hardship, a reduction in force, or for convenience of the government, or

  • Less than 181 days if you were discharged for a service-connected disability

I'm on active duty now

  • 90 continuous days

You are not eligible for VA financing solely based upon Active Duty for Training in the Reserves or National Guard.

Note: Guard and Reservists are eligible if they were "activated" under the authority of Title 10 or Title 32 U.S. Code. Those with Title 32 service must have at least 30 days continuous active service.

 

loan types

Purchase Loans and Cash-Out Refinances

VA-guaranteed loans are available for homes for your occupancy or a spouse and/or dependent (for active duty service members). To be eligible, you must have satisfactory credit, sufficient income to meet the expected monthly obligations, and a valid Certificate of Eligibility (COE).

Interest Rate Reduction Refinance Loan (IRRRL)

The IRRRL is a "VA to VA" loan, meaning it can only be done if you have an existing VA guaranteed loan on the property. The IRRRL is generally performed to lower the interest and reduce the monthly payment on the existing VA guaranteed loan.

Native American Direct Loan Program

The NADL program helps Native American Veterans purchase, construct, improve, or re-finance a home on Native American trust lands. Your tribal organization must participate in the VA direct loan program. You must have a valid Certificate of Eligibility (COE).

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Adapted Housing Grants

The VA helps Veterans with certain total and permanent disabilities related to their military service obtain suitable housing with either a Specially Adapted Housing (SAH) or Special Housing Adaptation (SHA) grant.

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Native American Direct Loan Program

To get a VA-backed home loan as the surviving spouse of a Veteran, you’ll need a Certificate of Eligibility (COE) to show your lender that you qualify for this benefit. Keep in mind that you’ll also need to meet your lender’s credit and income requirements to get a loan. Find out if you can get a COE.

 

disability housing grants

The VA offers housing grants for Veterans and service members with certain service-connected disabilities so they can buy or change a home to meet their needs and live more independently. Changing a home might involve installing ramps or widening doorways. Find out if you’re eligible for a disability housing grant—and how to apply.

Looking for a new home that will meet your needs?

GI Joe Homes' team of specialty agents has the experience and knowledge necessary to help you find the perfect home. Our agents are caring, compassionate, and patient enough to ensure you purchase exactly what you want and need without compromising or sacrificing a single thing.

 

resources

BLUE WATER NAVY ACT

Veterans who have served as far as 12 nautical miles from the shore of Vietnam, or who had service in the Korean DMZ, are presumed to have been exposed to herbicides such as Agent Orange, and may be entitled to service connection for any of the 14 conditions related to herbicide exposure.

The VA is also now able to extend benefits to children with spina bifida whose Blue Water Navy Veteran parent may have been exposed to Agent Orange or certain other herbicides while serving.

Additionally, the Act made other modifications to the VA Home Loan Program.

DISABILITY HOUSING GRANTS

The VA offers three different types of housing grants for Veterans and service members with certain service-connected disabilities so they can buy or change a home to meet their needs and live more independently. Changing a home might involve installing ramps or widening doorways. These grants are called the Specially Adapted Housing (SAH) grant, the Special Home Adaptation (SHA) grant, and the Temporary Residence Adaptation (TRA) grant.

VA POLICY ON NATURAL DISASTERS

The VA has guidance in place for Veteran borrowers who are participating in the VA home loan program and who have experienced a natural disaster. Additionally, the VA may provide assistance to you if your home was previously adapted with assistance of a VA grant and was destroyed or substantially damaged in a natural disaster.

Any VA Home Loan closed prior to the date of the declared disaster is eligible for VA Guaranty without regard to the disaster. For properties who were appraised on or before the date of the disaster, but not closed prior to that date, the VA has special considerations and guidance for your Mortgage Lender.

The VA's policy on Natural Disasters not only includes protections for your VA home loan, it also extends to your automotive grants, school attendance, and VA benefit payments.

 

Following any Natural Disaster, the VA encourages you to take the five steps listed in the PDF linked below.

ARE YOU HAVING TROUBLE MAKING PAYMENTS?

If you fall far behind on your mortgage payments, your mortgage servicer (the company that handles collecting the money for your lender) can take your house to cover the money owed. This process is called foreclosure.  VA loan technicians can help you avoid foreclosure and keep your house.

As a Veteran, you are eligible to receive VA financial counseling.

  • If you’re a Veteran or the surviving spouse of a Veteran, the VA will provide financial counseling—even if your loan isn’t a VA direct or VA-backed loan.

  • If you have a VA direct or VA-backed loan, you can contact the VA anytime to request that they assign a VA loan technician to your loan. These technicians can offer you financial counseling and help you deal with your servicer (or work with you directly in the case of a VA direct loan).

  • If you have a VA direct or VA-backed loan and it’s 61 days past due, the VA will automatically assign a VA loan technician to your loan.

Be careful about offers to help you make up back payments

 

If you’re behind on your mortgage payments and you get this type of offer from someone you don’t know, contact the servicer of your mortgage or your nearest VA regional loan center for advice. They can let you know if it’s an honest offer.

REGIONAL LOAN CENTERS

For Veterans or Servicemembers who have a VA-guaranteed conventional or sub-prime loan, the Department of Veterans Affairs (VA) has a network of eight Regional Loan Centers that can offer advice and guidance during times of financial hardship.

Borrowers may visit their regional office, or call toll free -1-877-827-3702 to speak with a VA Loan Technician. However, if a Veteran does not have a VA-guaranteed home loan, the VA does not have the authority to intervene on the borrower's behalf. It is imperative that you contact your mortgage servicer as quickly as possible when faced with financial hardship.

You can also contact GI Joe Homes for help or questions regarding the VA home loan by calling 1-650-400-7330.

 

GI Joe Homes is open seven days a week, from 8:00am to 6:00pm PST.

HOUSING COUNSELORS

Want advice on buying a home, renting, default, foreclosure avoidance, credit issues or reverse mortgages?

 

HUD sponsors housing counseling agencies throughout the country to provide free or low cost advice. Search the HUD website for a housing counseling agency near you, or call HUD's interactive voice system at: (800) 569-4287.

If you are facing foreclosure and want the assistance of a housing counselor, search HUD's list of Foreclosure Avoidance Counselors or visit the Making Home Affordable program Q for Borrowers.

If you would like to talk to a reverse mortgage counselor, you can search HUD's list of counselors here

Housing Counseling agencies participating in HUD's Housing Counseling Program are not

permitted to charge consumers for these specific housing counseling services.

SERVICEMEMBERS CIVIL RELIEF ACT

Veteran borrowers called up to active duty may be able to request relief pursuant to the Servicemembers Civil Relief Act (SCRA).  SCRA is intended to ease the economic and legal burdens on military personnel during their active service. The Act may provide for a lower interest rate, or prevent foreclosure or eviction for up to nine months following the period of military service.

 

Qualification

In order to qualify for certain protections available under the Act, the borrower must request protection under the Act, and the loan must have originated prior to the current period of active military service.

 

Contact Information

f you have questions about SCRA, you can either contact your lender directly, or reach a trained VA counselor at your nearest VA Regional Loan Center, or call 877-827-3702.

 

Additional Protections

The Department of Defense has detailed some of the most common forms of protection in a publication posted online at the DOD link below. Some of these protections are:

  • 6% Cap on Interest Rates

  • Termination of Leases

  • Protection from Eviction

  • Stay of Proceedings

  • Reopening Default Judgments

 

For more information about SCRA, or to read any of the SCRA circulars, please click on one of the following links:

 
 
 
 
 
 
 
 

comparisons

WHY CHOOSE A VA HOME LOAN?

The VA Home loan allows qualified buyers with certain military service requirements the opportunity to purchase a home with no down payment. Also, there are no monthly mortgage insurance premiums to pay, no limitations on the buyer's closing costs, and an appraisal requirement that informs the buyer of the property value prior to close. For most loans on new houses, construction is inspected at appropriate stages and a one year warranty is required from the builder. VA also performs personal loan servicing and offers financial counseling to help veterans  having temporary financial difficulties for the lifetime of their loan. Additionally, VA Home Loans can be assumed by buyers who meet certain financial qualifications, even those without the qualifying military service records.

Let's see how the VA Home Loan stacks up against the two other most commonly-issued home loans, below (we've chosen not to include USDA Home Loans in this comparison, but you can learn more about them here):

VA Home Loans

No down payment

No mortgage insurance (PMI) required

No prepayment penalty

.5% - 3.6% VA funding fee waived for borrowers that meet certain requirements

No minimum credit score requirements unless required by your lender

Two year waiting period after a foreclosure

Two year waiting period after dismissing a Ch7 bankruptcy;

No waiting period after discharge or dismissal of debt for Ch13 bankruptcy

Obtained through private lenders and insured by the federal government

VA Loans are assumable by the next buyer

Qualified borrowers can use remaining Entitlement to take out another VA Home Loan concurrently

Can only purchase primary residences (consisting of planned new construction, manufactured housing, condominiums, mobile homes, modular or pre-fabricated homes), or 1 - 4 unit owner-occupied multi-family properties

Conventional Loans

3% minimum down payment required

Mortgage Insurance required if down payment was less than 20%

No down payment

No funding fees

620+

Three to seven year waiting period after a foreclosure

Four years from declaring bankruptcy and two years from the dismissal date

Backed by private lenders and insured by the lender

Not assumable, unless a USDA-backed loan

No additional entitlement

Can finance a primary residence, vacation home, rental property, etc.

FHA Loans

3.5% minimum down payment required

Mortgage Insurance requirements range from .45% to 1.05% depending on the terms of your loan.

No down payment

1.5% of loan at closing; then

.4 - 1.05% yearly until repaid

580+

Three year waiting period after facing a foreclosure

 

Two year waiting period after declaring bankruptcy

Funded by private lenders and insured by the Federal Housing Association (FHA)

Generally assumable as long as the lender approves

No additional entitlement

Can only finance a primary residence

 

applying

1

The first step every borrower should take is finding out what loan types they are eligible for.

If you think you may be eligible for a VA Home Loan, you should apply for your Certificate of Eligibility, or COE next.

2

3

Once you have your COE, start researching lenders. Contact several and find out what rates and loan limits would be available to you. Be sure not to choose the first one you call - you never know what other lenders may be able to offer you!

While GI Joe Homes is more than happy to work with any lender, we recommend the three lenders, below.

You can also contact GI Joe Homes for help or questions regarding the VA home loan by calling 1-650-400-7330.

 

GI Joe Homes is open seven days a week, from 8:00am to 6:00pm PST.

Ask your new lender to give you a pre-qualification letter. GI Joe Homes - or any agent - will use your pre-qualification letter to begin looking for a home you can comfortably afford.

4

When you're ready to begin looking for your new home, the team of agents at GI Joe Homes are ready to help.

 

GI Joe Homes offers service to most of the Northern California area. If you're outside our service area, or would like a referral to an excellent agent in your own area, give us a call at 1-650-533-9067.

 

GI Joe Homes is open seven days a week, from 8:00am to 6:00pm PST. 

 

is the va home loan right for you?

If you're lucky enough to qualify for a VA Loan, you may be asking yourself whether a VA Home Loan actually is a good choice for you.

NO DOWN PAYMENT

For Sale: Just $1,000,000!

The most obvious benefit, especially for those looking to purchase in the extremely high-cost Bay Area, is the lack of a down payment. No down payment is required from the veteran as long as the sales price does not exceed the home's appraised value (the value set for the home after an expert has appraised the home).

 

Anyone that buys a home knows how difficult it can be to save up enough funds for a down payment in addition to all the closing costs. Even FHA loans, which require a 3.5 percent down payment, can still be a challenge, especially for first time home buyers and those looking in the Bay Area. Zero down is a huge benefit for those who are fortunate enough to qualify.

 

Let's look at an example and compare the three common loan types, below:

VA Home Loan

0% Down = $0.00

Conventional

3% minimum = $30,000

FHA

3.5% minimum = $35,000

Remember that these numbers are minimums. Often, in highly competitive markets, prospective buyers will offer more money on their down payments in order to get a leg-up on their competition. That means these percentages really are the minimum amount you would be paying for the down payment.

LOWER CLOSING COSTS

VA Home Loans also restrict the types of closing costs that the veteran is allowed to pay for. This restriction is found on no other loan type and is yet another example of how veterans can save money using a VA Home Loan to finance their new home.

For example, a lender might charge a borrower that is using an FHA or Conventional mortgage $1,000 or more in lender fees alone. Lenders also typically charge underwriting, processing and document fees on all of their loans, but VA borrowers may not pay for those fees and either the lender or the seller will pay them on the veterans' behalf.

In California, as a rule of thumb, closing costs amount to approximately 8 - 10% of the total sales price of a home, on average. They usually include a real estate commission, a loan fee, escrow fees, loan origination fees, county and city transfer taxes, a title insurance premium, a pest inspection and the like.

Let's look at another example of the common types of closing costs for a $1,000,000 Conventional loan, to the right:

Money Flying

Conventional

Title Service (.32%)

Title Insurance (.37%)

Transfer Tax (.11%)

Recording Fees (0.03%)

Property Taxes (variable)

.8% = $8,000

*Please note these calculations are averages, and do not include several fees that a buyer may be required to pay.

NO MONTHLY MORTGAGE PREMIUM

Credit scores don't just impact mortgage and home insurance rates, they also determine how much your PMI will be.

And when compared to loan programs with even a minimal amount down - say 3% - monthly mortgage insurance premiums are a requirement, adding to the cost of the loan as well as reducing the qualifying loan amount.

 

Depending upon the program, the amount down and other factors, yearly mortgage insurance premiums can add .45 - 5% to the total cost of a loan. That could be another few hundred dollars to your monthly mortgage payment.

Here is an example of how a borrower's credit score impacts the cost of mortgage insurance:

 

Consider two individuals who each want to buy a home valued $100,000 and who can both put $10,000 down (or 10% of the value of the home).

 

Although they can make the same down payment, their credit scores are major determinants when it comes to the cost of their mortgage insurance policies. To show this, we graphed the price difference across credit score silos for a mortgage insurance policy offered by Radian. The policy is for a borrower-paid mortgage insurance policy that covers a fixed rate loan with a term longer than 20 years. You can see that if Borrower A has a FICO credit score of 760 or higher and Borrower B has a score lower than 639, Borrower B’s mortgage insurance premiums would cost 4x that of Borrower A’s.

PMI Rate

Credit Score

SITUATIONS WHERE IT MAY NOT BE THE BEST

There are a couple of specific instances where a VA loan isn't your best bet. First, if you're refinancing your mortgage and you want cash out during the process, you're typically limited to 90 percent of the value of the property. If you've acquired enough equity in your home in order tap into your equity and pull out additional cash, the amount received will be less when the Funding Fee is added to your final loan amount.

The funding fee also plays a role in any refinance transaction. The funding fee is a charge used to finance the VA's loan guaranty program and can range in amount from 2.15 to as high as 3.30 percent of the loan amount. If you're pulling cash out, on a $300,000 loan amount, your cash could be reduced by $9,900.

If you have equity in your property, regardless of any cash out, you may want to refinance into a conventional mortgage, restoring your VA entitlement. Conventional mortgages don't have a funding fee and with sufficient equity, you can refinance your mortgage at a cheaper cost and still get cash out at your discretion.

VA loans are perfect for those who qualify wanting a loan with no down payment and fewer closing costs. Yet if you do have a down payment of 20 percent, you should consider another choice, avoiding the funding fee charged on all VA loans.

the process