The VA Home Loan - A big thank you for your service!
These are the 3 forms you will need, but please read below what you need to do with them...
Buying a home with a VA Loan requires no down payment.
HOW COOL IS THAT?
VA Home Mortgage Loan Advantages vs Other Mortgage Loan Options
- VA home loans do not require a down payment, unless the purchase price is more than the appraised value or in excess of current loan limits.
- VA home loans have limitations on which closing costs may be assessed to the veteran.
- VA home loans have no prepaid without penalty.
- Maximum (zero down) VA loan has increased to match conforming loans!
- VA home loans may have forbearance extended to worthy VA homeowners experiencing temporary financial difficulty
- VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties
- VA interest rates are competitive with conventional loan interest rates.
- VA home loans do not require mortgage insurance - this is a HUGE savings.
- Although there is no down payment required - There are still closing costs, but the seller usually pays ALL of the veteran's closing costs (and with a $0 down payment, the veteran can literally purchase a home for nothing).
We are sensitive to the needs of our American Veterans. But before you get a VA loan, you will need a Certificate of Eligibility, and your DD-214. If you do not have one, or cannot find it, you must contact the VA to get one.
DD214 VA Loan Document
VA CERTIFICATE OF ELIGIBILITY and DD214
How to obtain these important VA Loan Documents
Your Certificate of Eligibility is a document issued by the Department of Veteran Affairs that determines
- if you are eligible for a VA home loan
- how much entitlement you have remaining.
Income Guidelines for VA Home Loans
When buying a home in Minneapolis, St Paul, Milwaukee, Madison, or all of MN and WI, the VA still requires a borrower to have sufficient and adequate income to cover the repayment of the mortgage. Before a borrower can be approved for a VA home mortgage loan, the stability of income and the continuance of the borrower's income must be established through acceptable sources of income, the borrower's past employment record, and the employer's confirmation of continued employment must be established.
Stability of a person's income is generally derived from their employment history. VA requires verification for the previous two full years and must be documented through lender verifications of previous employment or W-2's. This income must be analyzed to determine whether it can be expected to continue through the first 3 years of the mortgage loan (if the borrower intends to retire during this period, the expected retirement income, social security benefits, etc. should be used). Any gaps in employment must be reasonably explained by the borrower. Schooling or education for the borrower's profession (e.g. nursing school) can be counted towards the 2 year requirement. Allowances for seasonal employment, such as is typical in the building trades for example, may be used.
VA FUNDING FEE
In order for VA to guarantee the home loan in Minnesota or Wisconsin, there is a closing cost assessed by the VA to originate the loan called a funding fee. This fee will vary, depending upon the type of VA loan, whether this is your first time to use your entitlement, if you are a disabled veteran, the down payment and if you served active duty or in the National Guard/Reserves.
The VA funding fee is required by law. The fee, 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 is a bit more expensive. 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 down payment.
VA STREAMLINE REFINANCE- IRRRL
An "Interest Rate Reduction Refinance Loan" (IRRRL) or VA Streamline Refinance allows Veterans to refinance their current mortgage interest rate to a lower rate than they are currently paying. This program is only available to veterans who are refinancing their original VA mortgage in which they utilized their original eligibility.
Loan Conditions:
- NO out-of-pocket costs
- In some cases, No appraisal needed
- In most cases, no income verification needed
- The VA charges ½ percent funding fee to guarantee the IRRRL Loan.
- There is no cash out on an IRRRL loan.
- The loan being refinanced must be current and have a perfect pay history for the last 12 months.
- 2nd mortgages cannot be included and must subordinate.
- No assumptions are allowed.
- This loan can be done with "no out of pocket money" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
VA Cash-Out Refinance
Cash-out refinances on properties owned more than one year prior to the refinance are permitted on owner occupied principal residences only, and are limited to 90% of the appraised value plus the allowable closing costs.
A cash-out refinance is when a borrower refinances their current mortgage for more than they owe in order to pull out the built up equity that has accrued in the home. The amount a home owner can borrower is limited by the value of the property compared to the loan amount (otherwise known as the loan-to-value or LTV).
The following are basic requirements of a cash-out VA refinance loan:
- If the property was purchased less than one year preceding the refinance, the borrower is allowed to refinance up to 90% of the original sales price plus the allowable new closing costs or the appraised value plus the allowable closing costs (whichever is lesser)
- If the property was purchased more than one year preceding the refinance, the borrower can cash-out 90% of the the appraised value plus the allowable closing costs
- Applies to owner occupied properties only
- 2nd mortgages may be paid off with the cash-out refinance (the second mortgage must be at least 12 months old)
- Loan amounts may not exceed 90% of the appraised value.
- The borrower must have sufficient entitlement for the loan (not including any existing entitlement that was used for loans to be paid off by the refinance
- There must be a first lien against the property
- If the new loan is to refinance an existing mortgage to buy out an ex-spouse's equity, a divorce decree or settlement agreement must be provided to document the equity awarded to the ex-spouse
- All borrowers must credit qualify
- A funding fee of 3.00% will be added to the loan amount at time of closing (there are no refunds for previous funding fees assessed by the VA).
- Borrower may receive cash proceeds at closing
- Maximum loan term is 30 years plus 32 days
If you live in one of the following states:
Alabama, Connecticut, District of Columbia, Delaware, Florida, Georgia, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Vermont, Virginia or West Virginia
Mail your VA Form 26-1880 and proof of military service to:
VA Loan Eligibility Center
PO Box 20729
Winston-Salem, NC 27120
Toll free number: 1-888-244-6711
If you live in one of the following states:
Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wisconsin or Wyoming
Mail your VA Form 26-1880 and proof of military service to:
Los Angeles Eligibility Center
P.O. Box 240097
Los Angeles, CA 90024
Toll free number: 1-888-487-1970
DD Form 214
The DD Form 214 serves as your proof of military service. If you do not have your DD Form 214, you can request it from the National Personnel Records Center, using a Standard Form 180 (Request Pertaining to Military Records).
After you fill out your Standard Form 180 send it to:
National Personnel Records Center (NPRC)
Military Personnel Records
9700 Page Avenue
St. Louis, MO 63132-5100
After you fill out your Standard Form 180 send it to:
The NPRC will send you your service record (DD Form 214) after processing your Standard Form 180.
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