The Clear Facts on VA
What it is:
• Benefit for Military Personnel (active duty, veterans, reservists, surviving spouses). VA will guarantee up to 25% of the mortgage.
Customer benefits:
• Eligible for 100% financing under most circumstances. There will not be a 5% reduction in the loan to value on VA loans.
• No monthly mortgage insurance
• No Pre-Payment Penalty
• Only need a 600 score
• Seller can pay closing costs
o No limit on "non-recurring" closing costs (appraisal, credit, etc) or discount points with 4% limit on funding fee, prepaids or buydown funds.
Funding Fee:
• Similar to FHA Up Front Mortgage Insurance
• Amount of Funding fee is based on service type, prior use, and transaction type. If borrower is a disabled veteran (VA must certify), then funding fee is waived
• Funding fee may be financed or paid in cash
Entitlement:
• Entitlement is the dollar amount of the guaranty available to the veteran
• Veteran with full entitlement can often purchase a home with zero down payment
• Certificate of Eligibility will document available entitlement
Loan Limits:
• FHLMC Conforming Loan limit (currently $417,000)
Eligible Transactions:
• Purchase
• Full Refinance (Rate/Term, Cash Out) or IRRL (Interest Rate Reduction Loan) - VA "Streamline" Refinance
Eligible borrowers:
• U.S. Citizens, Permanent Resident Aliens, and non-Permanent Resident Aliens
• Co-Borrower must be borrower's spouse
o If co-borrower is not the borrower's spouse, this is considered a "joint loan". Guaranty will be based on veteran's portion of the loan (often requiring a down payment).
Eligible Products:
• 20-30 Year Fixed, 15 Year Fixed, 3/1 ARM, and 5/1 ARM
Property:
• Eligible Properties: SF, 2-4, Condos, Manufactured Homes, New or Existing Construction
• Condominium projects MUST BE approved by VA (no spot approvals). Link for VA Approved Condos: http://condopudbuilder.vba.va.gov/2.2/frames.html
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