ASSOCIATE
BROKERS - PRUDENTIAL CRANE
The following
information is deemed to be accurate at the time of
input; however, lender and government guidelines do
change from time to time. Always check for changes or
additional requirements with your lender. Do not rely on
this information as your sole source. It is intended to
give you general information.
VA LOANS
The Department of Veterans Affairs (VA) is a government
agency that guarantees mortgages against default in much
the same way FHA does. The major differences in the two
agencies involve down payment requirements and the
absence of MIP.
VA AUTOMATIC LOANS
Some lenders have been approved to underwrite VA loans in
their own offices. This eliminates the time-consuming
process of mailing applications to VA. Although the
appraisal must be obtained from VA, use of an automatic
lender often saves valuable processing time. Not all VA
borrowers will be eligible for automatic processing,
however.
VA ELIGIBILITY
A Certificate of VA Eligibility will not be issued to any
Veteran who has monies owing to the Department of
Veterans Affairs resulting from school loans or other
benefits. Bankruptcy does not eliminate Federal debt!
The VA eligibility requirements are as follows:
1. Veteran must have other than dishonorable discharge.
2. Any individual presently on active duty who has 181
consecutive days of service.
3. Any veteran on active duty prior to September 7, 1980
who has served a minimum of 181 consecutive days.
4. If veteran entered after September 7, 1980 and did not
complete at least 24 months he is not eligible unless he
had 181 days and: -- was discharged for disability,
service connected or not -- was discharged for hardship
-- is suffering from a service connected disability which
is not the result of misconduct.
5. Any reservist who has served 6 years on active
reserves is eligible. VA funding fee is slightly higher.
VA GUARANTEE
The maximum VA guarantee is now $50,750. The borrower can
borrow up to four times his available guarantee, to a
maximum of $203,000. Even if a Veteran has used his
eligibility before, he may have enough entitlement
remaining to get another loan, or it is possible that he
may get his eligibility reinstated.
DOWN PAYMENT: The VA
does not require a down payment as long as the sale price
does not exceed $203,000. The veteran may use a down
payment if he wishes.
MONTHLY PAYMENT: Calculate the same as
FHA level payment.
VA BUYER QUALIFICATIONS
CREDIT:
Veterans must verify two years of satisfactory credit
history. However, the VA is very liberal on this point
and will usually allow a veteran who has not established
credit to indicate by letter that he prefers the use of
cash. The VA looks for two years of good credit and
one-year of great credit.
EMPLOYMENT:
A Veteran must be able to verify two years of
satisfactory employment. The VA is very strict on job
stability. If he or she was in the service or in school,
that time will normally count toward the requirement, so
long as the old job or school relates to the new job.
BANKRUPTCY:
The VA will generally disregard bankruptcy after 2-3
years, if credit has been re-established. If the
bankruptcy occurred less than 2-3 years ago and the
Veteran had a reason which was beyond his control, then
they will consider each case individually. If the
bankruptcy was discharged less than two years ago the
time frame is not considered to be great enough to
reestablish a credit standing.
MONTHLY DEBT PAYMENT:
The VA may count all monthly obligations against the
buyer, but if they are less than six months in duration
they might not count against the applicant. Also, the VA
uses only the minimum monthly payment required on
revolving accounts.
CASH REQUIRED:
A Veteran must be able to verify that he has enough cash
to pay the down payment and closing costs before being
submitted for VA approval. The seller may pay all of the
Veteran's closing costs and prepaids. Therefore, it is
possible for a Veteran to buy a home with no cash
required. Buyers may borrow cash needed to close with
unsecured a loan. (i.e. credit card debt)
GIFT LETTERS:
Gift letters from relatives are acceptable, but they must
state what the gift is intended for, the amount, the
donor's relationship to the Veteran and that the money is
a gift and need not be repaid.
CHILD SUPPORT:
Child support received by the Veteran or Veteran's spouse
will usually count toward income, but it is necessary to
prove receipt of this income (payment through the court
or cancelled checks.) Must continue for at least 3 years
to be used.
RENTAL INCOME:
Rental income may count if the buyer has a lease
agreement or a statement from a tenant verifying the
payment. Caution: Figure only 66.66 % of the net rental
income since VA makes allowances for vacancy, taxes and
maintenance.
CO-BORROWERS:
Two veterans may purchase a home together and the
eligibility could be split between them or all of one
Veteran's eligibility could be used if preferred. Both
incomes would count toward qualification m these cases.
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