Qualifying for VA Loans

Veterans Administration home loans or popularly known as VA loans are formulated to help veterans and active-duty service members to buy and/or retain their homes. This is one way the country would recognize and compensate the service these heroes have rendered. Here are the specific people who are eligible for these loans:

• Active-duty veterans and current service members. They should have served at least 90 days in wartime or 181 consecutive days in peacetime. If discharged from service, the reason should not be under dishonorable conditions.
• Gulf War service members. They should have 24 months of non-stop active-duty service or full period (at least 90 days) of service since called to active duty. In case of discharge, it should be under 10 USC 1171 or 10 USC 1173 with at least 90 days of active duty. If discharged before the full period, it must be due to a service-related disability.
• Guard and Reserve personnel. They must complete six years in total combination during duty in an active unit, weekend drills and two-week training. The same eligibility is applied for discharge related with disability occurred due to service.
• Unmarried spouses of veterans. They should be spouses of those who died while in service. Also, eligibility is applied if the death is caused by the disability acquired while in active duty. Spouses of members who are enlisted as missing in action (MIA) or prisoners of war (POW) are entitled of these loans.

Once eligibility is determined, here are important details about the process and requirements of qualifying for the loan:

The applicant should have the home loan entitlement through the Certificate of Eligibility. This is obtainable through the VA website. Some banks and mortgage companies could also get the document in behalf of the applicant provided there is proper authorization.

The loan must be for valid reasons like to buy, build, improve, repair or refinance a home. The refinancing is applicable even for existing VA loan so the applicant could have lower interest rates.

The VA loan could guarantee up to 50 percent of home loans amounting to $45,000. However, the guarantee varies according to the amount of the loan.

Because the VA is only guaranteeing the loan, the borrower should still apply with a lending agency. The same process is almost the same. Here is an overview:

• The property would be appraised. The Certificate of Reasonable Value (CRV) is used by the VA to establish the property value and maximum loan amount.
• Income statements and credit reports are needed.
• Fully accomplished VA eligibility form should be given.
• When these are furnished and approved, the loan would be underwritten.
Basic funding fees also vary:
• 2.0% of the loan to be paid to the VA for most veteran applicants
• 2.75% for Reserve and Guard members
• Fee could be reduced if the down payment is increased from 0 up to 10%
• If the applicant is using the entitlement for a second or subsequent times, 3% is charged especially if he or she is not making a down payment

Other costs may be charged for reasonable closing costs like appraisal, origination fees and others. These could be paid by the applicant, the home seller or even shared.

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