VA Home Guidelines
The United States Department of Veterans Affairs, or VA, offers home loans to veterans and in some cases non-veterans who meet specific criteria. VA home loans are similar to Federal Housing Association loans in that they're made by private lending institutions, but receive backing or protection from the VA in the event of a foreclosure situation.
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Eligibility
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VA home loans are only available to veterans or the surviving spouses of veterans who died in service or as a result of their military service. The VA loan program is available to both veterans who served in active duty and to reservists or members of the National Guard who never served in active duty. According to the VA, surviving spouses must show that the death was connected to military service to be eligible for the VA home loan program.
Entitlement Amounts
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The basic loan entitlement from the VA is $36,000; usually, homes can be financed for four times the entitlement amount. Homes that are more expensive or areas that are more expensive can still be financed through the VA program. The VA website notes that entitlement amounts up to 25 percent of the VA county loan limit are available. That means that the buyer can buy up the highest VA limit home in the area if they qualify for the full entitlement. Limits vary across the country, and the VA keeps an updated limit list for what it deems high-cost counties online.
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Occupancy
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The VA home loan program, just like the FHA program, requires that the borrower certify they will occupy the property as their home or primary residence. According to the VA website, this law also applies for the spousal portion of the loan. It is important to note that active duty military can satisfy the occupancy requirement if their spouse lives in the home, or if they are deployed or serving out of the country.
Costs and Fees
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Home loans under the VA program do not require a down payment or mortgage insurance premiums. There are no pre-payment penalties allowed with VA loans, and all loans are equal-opportunity regardless of race, sex or religion. VA loans do have fees that come with other loan types. According to the VA website, closing costs and a VA funding fee are the large costs associated with the loans. Funding fees are reduced if you make a 5 percent down payment, and closing costs are comparable with other loans. Interest rates on VA loans are set by the banks or lending institutions and not by the VA or the loan program.
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References
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