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VA HOME LOANS
The VA loan came into existence in 1944 when the GI Bill of Rights was signed into law, one of
a number of benefits granted to veterans at the end of WWII. This program provided a federal
guarantee to private lenders so that veterans could buy a home with no down payment. So the
federal government does not make the loan, it simply indemnifies the lender against loss of up to
25% of the loan amount to a maximum dollar amount of $104,250. Eligible veterans are those
who served on active duty for at least 90 days of wartime service or 181 continuous days during
peacetime and have a discharge that is other than dishonorable. There is a two year requirement
if the veteran enlisted and began service after 9/7/80 or was an officer and began service after
10/16/81. There is a six year requirement for national guards and reservists with certain criteria
and there are specific rules concerning the eligibility of surviving spouses.
Of course if you are currently on active duty you may apply for an in-service VA loan as long as
you meet the above criteria. If you have been discharged, it is a good idea to put your discharge
papers (specifically your DD214) in a handy place for you will need that to get the Certificate of
Eligibility required for a VA loan. If you have lost or misplaced your DD214 we can help you to
get another or you may apply directly to your local VA office if you prefer. If you have already
used your VA eligibility to buy a home which you have subsequently sold, in most instances you
can obtain a full reinstatement of eligibility as long as that VA loan has been paid off. We can
also help you with that.
At present, the maximum VA loan (assuming no down payment) is $697,500. Of course the
home must appraise for the purchase price; however if the VA appraisal is less than the agreed
upon purchase price and the veteran buyer chooses to pay over the appraisal, he may do so but he
must make up the difference in cash. If you buy a home for more than $697,500. VA can still
guarantee the loan but there will be a down payment requirement. Currently VA has 3 types of
loans available: 1) 30 year fixed interest; 2) 15 year fixed interest; 3) a hybrid 3/1 or 5/1 ARM.
A veteran may also use his eligibility to buy up to four units with no money down as long as the
purchase price does not exceed $697,500. Remember, however, that you must occupy one of the
units. There is a problem in California where property values are high and small units are often
priced above $697,500. In that case you may want to consider using FHA financing, since you
can buy up to four units with a maximum loan of $892.950. and a down payment as low as 3% of
the purchase price. Feel free to call us for details.
Keep in mind that all loan limits are based on the location of the property.
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