The US Department of Veterans Affairs provides patient care and federal benefits to veterans and their dependents. They have specific loans for Veterans, Reservists, and active-duty service members (those who have served our country on active duty since World War II). VA offers some of the easiest requirements of any mortgages.

Some of the benefits of VA financing:

• Zero Down 100% financing for Veterans with no Private Mortgage Insurance

• Great for little or no established credit

• Excellent Rates

• No Prepayment Penalty

Who is eligible for a VA home loan?

Veterans who served on active duty and were discharged under conditions other than dishonorable, during World War II and later periods are eligible for VA loan benefits. Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving may be eligible.

Why is VA financing a good deal?

Veterans should consider the many advantages of VA home loans. The most important feature of the program is that veterans and active duty military personnel can finance their homes with no down payment. That means the loan maximum may be up to 100 percent of the VA-established reasonable value of the property.

What are the necessary steps to obtaining a VA loan?

1. First, you’ll need to apply for a Certificate of Eligibility. A veteran who doesn’t have a certificate can obtain one easily by completing VA Form 26-1880.

2. Request for a Certificate of Eligibility for VA Home Loan Benefits. Once completed, submit it to one of the VA Eligibility Centers with copies of your most recent discharge or separation papers.

What if I’ve already had a VA loan?

Veterans who had a VA loan before may still have “remaining entitlement” to use for another VA loan. The current amount of entitlement available to each eligible veteran is $36,000. This was much lower in years past and has been increased over time by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used $12,500 guaranty entitlement, the maximum then available.

Are there any costs involved?

One of the common errors made by people buying homes is to think that the only cost will be monthly payments of principal and interest on the mortgage. It is important to keep in mind that there are other items which have to be paid which add up to a substantial outlay. Before you buy, be sure that your income is sufficient to cover all of the cost which you will have to pay.

How do I apply for the loan?

The application process for VA financing is no different from any other type of loan. In fact, the VA application form is the same as that used for HUD/FHA and conventional loans. The mortgage lender verifies the applicant’s income and assets, and obtains a credit report to see that other obligations are being paid on time. If all is well and the appraised value of the property is enough to cover the loan needed, the lender, in most instances, can then close the loan under VA’s automatic procedure.

The Cost of Homeownership

One of the common errors made by people buying homes is to think that the only cost will be monthly payments of principal and interest on the mortgage. It is important to keep in mind that there are other items which have to be paid which add up to a substantial outlay. Before you buy, be sure that your income is sufficient to cover all of the cost which you will have to pay.

Equal Housing Opportunity

Discrimination in the sale of housing because of race, color, religion, sex or national origin is prohibited by Federal laws. In November 1962, Executive Order 11063 banned discrimination in all federally assisted housing.

Future Costs of Homeownership

The down payment, if any, and closing costs are costs you will have when your loan is made. But they are only the initial costs. You must also be able to pay the future costs from your income.

The Agreement to Purchase the Home

When you have decided to buy, the builder or seller will usually require a cash deposit (earnest money) as evidence that you really intend to go through with the deal. Make sure that when you make a deposit, you get a signed agreement from the seller to refund your deposit if you are unable to obtain VA financing, or if the builder and/or seller fails to go through with his or her part of the agreement.

The Final Process- Close of Escrow    

After the house is ready and the financing has been arranged, the lender will set a date for “settlement” or “closing.” Settlement day is the day when the property officially becomes yours. You will also remember it as the “paper signing day.” It generally occurs 30 days or more after the contract has been signed.

Before and After Moving Day

Soon after final settlement or closing, you will move into your new home. Before you close on your new home, your Realtor® will take you on a Final Walk-Through. This is when you should check the house carefully to be sure that it is in good condition, and that the builder or seller has completed everything called for in the contract.

Some Other Items to Know About

If you buy a house with a VA loan, VA will appraise the property to establish its reasonable value, which is an estimate of the current market value. You will be notified of the reasonable value. If you are building a home or buying a newly completed home with VA financing, VA or HUD/FHA will usually inspect the property during construction. These inspections are to see that the house is constructed according to the plans and specifications originally filed with VA and that it meets the minimum property requirements established by the Government.

This inspection service is valuable to you because it helps assure that your builder follows the construction practices advocated by the Government to assure a sound structure. It does not give you architectural supervision and does not assure you that you will be completely satisfied with what you get. Your main reliance must be on the reputation and integrity of the builder from whom you choose to buy. But remember that the Government cannot guarantee you that the house is properly constructed in all respects, nor can it guarantee that you will be satisfied with the house in every way.

The responsibility of the Government is limited under the law. VA is guaranteeing your loan, but it cannot under the law guarantee your house. Because of this, it is very important that you have confidence in the ability and honesty of the company or person who is building or has built the house. If you have any doubts at all, be sure to get the advice of people you can trust who know the home building business. A few words of good advice from a responsible person can save you years of future trouble.

In addition to the general location and neighborhood, you should make sure you are going to be satisfied with the size and shape of your lot, and with the existing or proposed lawn, shrubbery, walks, driveway, garage. etc. If you want to have play space for the children, or a garden, make sure that sufficient space is available.

The saying in real estate is “Location, Location, Location”. Due your due diligence prior to making an offer to buy a home. If you want to be entirely satisfied with your new home, you’ll want to do your homework before you fall in love with a house. There are many things to consider, including location, schools, surroundings and zoning.

United States Department of Veterans Affairs Website:  www.va.gov

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