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VA LOANS
Crestline Mortgage is proud to serve the military community of Colorado Springs. We understand the needs of our military families and take great pride in helping them achieve their dreams of home ownership. If you're stationed at Fort Carson, Peterson AFB or Shcriever AFB please give us a call. We guarantee that you will be treated with the honesty and respect you deserve. Please feel free to use this page as a reference, you'll find answers to most of your questions regarding VA Loans, VA Entitlement and VA Eligibility on this page.
How to get your Certificate of Eligibilty
The VA does not offer an online certificate request. However we can get an online VA approval when submitting a loan application using the Automated Certificate of Eligibility (ACE) system. A completed application is needed for submission. If the VA has sufficient information on file for the borrower, it will verify eligibility and issue an electronic certificate. This can save weeks of waiting for a paper certificate in the mail.
How to apply in writing
To request your certificate by postal mail, you must provide proof of service and a completed VA form 26-1880. Proof of service can be a letter from your personnel office or a copy of your DD-214 certificate of retirement. If you have lost your DD-214, you can request a new one from http://www.archives.gov/veterans/military-service-records/
Mail your 26-1880 and proof of service to:
VA Eligibility Center
PO Box 20729 Winston-Salem, NC 27120
This process will take 4-6 weeks for processing.
For overnight delivery:
VA Loan Eligibility Center 251 N. Main Street Winston-Salem, NC 27155 You can also call and speak to someone:
Check the status of your certificate request -
Toll free number: 1-888-244-6711
Overview-VA Loans
VA guaranteed loans are made by private lenders and mortgage companies to eligible veterans for the purchase of a home that must be for their own personal occupancy. To get a loan, a veteran must apply to a lender. If the loan is approved, VA will guarantee a portion of it to the lender.
If the veteran has never used his/her entitlement before, or previously used it for a home which has been sold and the loan paid in full, the he/she has full entitlement available and can apply for maximum VA financing.
Based on secondary market requirement, lenders generally limit VA purchase loans to $417,000 (including the funding fee), which is equal to the conventional conforming loan limit for 2008. In December 2004, VA guidelines were modified so the maximum entitlement will index and increase accordingly with conforming loan limits, therefore always equaling 25% of the current conforming limit.
Requirements for VA Loan Approval
To obtain a VA loan, the law requires that:
- The applicant must be an eligible veteran who has available entitlement.
- The veteran must occupy the property as a home.
Eligible Loan Purposes
Eligible veterans and service personnel may obtain loans for the following purposes:
- To buy a home up to 4 family units for one veteran, including townhouses or condominium unit in a VA approved project.
- To build a home.
- To refinance an existing home loan
- Cash-out Refinance
- Reduce the interest rate (Interest Rate Reduction Refinance Loan-"IRRRL")
Advantages of VA Home Loans
- 100% Financing/ No Down Payment
- One Ratio Calculated-Back Ratio 41%
- No Cash Reserves Required
- VA Funding Fee Can Be Financed
- More Leniency on Derogatory Credit
- Seller Contribution 4% Including Prepaids
- No Monthly Mortgage Insurance
- Maximum Loan Amount equal to the Conforming Loan Limit
Who Is Eligible?
Service Era Dates Minimum Service
WW II 9/16/40-7/25/47 90 Continuous Days
Post WWII 7/26/47-6/26/50 181 Days
Korean 6/24/50-1/31/55 90 Days
Post Korean 2/01/55-8/04/64 181 Days
Vietnam 8/05/64-5/07/75 90 Days
Post Vietnam (Enlisted) 5/08/75-9/07/80 181 Days
Post Vietnam (Officer) 5/08/75-10/16/81 181 Days
Post Vietnam (Enlisted) 9/08/80-08/01/90 2 Years*
Post Vietnam (Officer) 10/17/90-08/01/90 2 Years*
Persian Gulf 08/02/90-present 2 Years
- The veteran must have served 2 years or the full period which called or ordered to active duty (at least 90 days during wartime and 181 during peacetime).
Other Eligible Persons** Minimum Service
Active Duty Member* 90 Days (181 During Peacetime)
Reserve/Guard 6 years in Selected Reserves
Disabled Veteran As determined by VA
*Certificate valid only while veteran remains on active duty.
**A surviving spouse that does not qualify for VA entitlement may still be eligible for an Interest Rate Reduction Refinance Loan (IRRRL). If the spouse previously purchased property with the veteran (who is now deceased) under a VA loan and now wishes to take advantage of a lower interest rate, he/she can reuse the veteran’s entitlement to obtain an IRRRL.
Note: This chart is only a general guide as to who may be eligible to receive a VA-guaranteed loan. Eligibility and available entitlement must always be determined and reported by VA on Form 26-8320, "Certificate of Eligibility for Loan Guaranty Benefits," or Form 26-8320a, "Certificate of Eligibility for Loan Guaranty Benefits (Reserves/National Guard)". A veteran, who has served less than the minimum required period of services or was discharged because of a service-connected disability, may be eligible for home loan benefits.
VA Funding Fee
The VA Funding Fee is a one-time, up-front charge applied as a percentage to the "Base Loan Amount". The Funding Fee may be financed into the loan provided the entire loan amount including the Funding Fee does not exceed the current conforming loan limit ($417,000 for 2008). The fee is remitted by the Lender to VA after loan closing. The fee is fully earned by VA upon loan closing and is not available as a prorated refund to the veteran, even if the veteran refinances to another VA loan at a later date.
Funding Fee Tables
PURCHASE AND CONSTRUCTION PAYOFF LOANS
|
Type of Veteran |
Down Payment |
Percentage for First Time Use |
Percentage for Subsequent Use |
|
Regular Military |
None (Closed 10/1/06 thru 9/30/07)
None (Closed 10/1/07 and after)
5% or more (up to 10%)
10% or more |
2.15%
2.15%
1.50%
1.25% |
3.35%
3.3%
1.50%
1.25% |
|
Reserves/
National Guard |
None (Closed 10/1/06 thru 9/30/07)
None (Closed 10/1/07 and after)
5% or more (up to 10%)
10% or more |
2.4%
2.4%
1.75%
1.5% |
3.35%
3.3%
1.75%
1.5% |
REGULAR REFINANCE LOAN (CASH-OUT) **
** All VA refinance loans are considered "cash-out" except IRRRLs and loans to payoff (1) construction loans, (2) installment land contracts, and (3) loans assumed by veterans at interest rates higher than the proposed refinance. All other VA refinance loans are considered "cash-out" whether or not the veteran actually receives the cash.
|
Type of Veteran |
Dates |
Percentage for First Time Use |
Percentage for Subsequent Use* |
|
Regular Military |
Closed 10/1/06 thru 9/30/07
Closed 10/1/07 and after |
2.15%
2.15% |
3.35%
3.3% |
|
Reserves/
National Guard |
Closed 10/1/06 thru 9/30/07
Closed 10/1/07 and after |
2.4%
2.4% |
3.35%
3.3% |
* The high subsequent use fee does not apply if the veteran’s only prior use of the entitlement was for a manufactured home loan not titled as real estate.
IRRRLS
|
Type of Loan |
Percentage for all Veterans Whether First Time or Subsequent Use |
|
Interest Rate Reduction Refinancing Loans |
.50% |
Funding Fee Exemption
In certain cases, a veteran may be "exempt" from the funding fee. Immediately upon receipt of a loan application, VA requires the broker to ask these four specific questions of the veteran or surviving spouse applicant:
- Are you currently receiving VA disability benefits?
- Have you (or your deceased veteran spouse) ever received VA disability benefits?
- Have you (or your deceased veteran spouse) ever been rated disabled or incompetent by VA regardless of whether or not benefits were ever received?
- Are you the surviving spouse of a veteran who died on active duty or as a result of a service-connected disability?
If the answer to any of the questions is "yes", the veteran is "exempt". The funding fee is not charged and the broker must obtain from the VA, a completed VA Form 26-8937, Verification of VA Benefits. This form must be included in the underwriting package anytime the funding fee is not charged.
If the answer to all four questions is "no", the funding fee is charged, the VA-completed form 26-8937 is not required, and evidence that all required questions were answered as "no" may be included in the underwriting package in lieu of Form 26-8937.
ENTITLEMENT, GUARANTEE, AND MAXIMUM LOAN AMOUNTS
VA does not establish maximum loan amounts. However, the secondary market requires VA loans (other than IRRRLS) to have a 25% guaranty, which can be met with a combination of VA entitlement, plus the veteran’s down payment and/or equity in the property.
The maximum amount of VA guaranteed loan that can be granted to a veteran and sold in the secondary market is, therefore, determined by the type of loan, the amount of the funding fee, the value of the property, the veteran’s down payment and/or equity in the property, and the veteran’s available entitlement.
The Two Types of Entitlement – Basic and Bonus
Eligible veterans have two types of entitlement, "basic" and "bonus". Basic Entitlement is $36,000. This is the maximum that can be shown on the COE unless changed by Federal Legislation.
Bonus Entitlement is never shown on the COE, and varies year-to-year based on the conforming loan limit. For 2008, bonus entitlement is $68,250.
Bonus Entitlement is available only for these types of loans that exceed $144,000:
- Purchase transactions
- Refinance transactions that pay off construction loans and installment land contracts
Bonus Entitlement is not available for rate and term or cash-out refinance transactions, therefore, those loans are limited to:
- $144,000 unless the veteran has sufficient equity in the property equal to 25% of the appraised value when combined with the veteran’s available basic entitlement.
Property Eligibility
Existing Construction
1-4 family owner-occupied dwelling that at the time of appraisal:
- Has been previously owner-occupied
OR
- Fully completed for 12 months of more.
New Construction
1-4 family owner-occupied dwelling that at the time of appraisal:
- Has been fully completed for less than 12 months
OR
- Is fully completed EXCEPT for "Customer Preference: items (interior wall finishes, floor covering, appliances, fixtures and equipment, etc.). The broker and builder should work closely together to determine when the property has reached this stage and when the appraisal should be ordered.
One of the following is required:
- 1 year VA Builder’s Warranty (VA Form 26-1859, "Warranty of Completion of Construction") AND Builder VA ID#.
OR
- 10 year Warrant Acceptance Letter AND Builder VA ID#
Proposed or Under Construction
1-4 family owner-occupied dwelling that at the time of appraisal:
- Is not completed to the "Customer Preference" stage (see above)
The following are required:
- 1 year VA Builder’s Warranty (VA Form 26-1859, "Warranty of Completion of Construction")—always
- Builders VA ID#
- One of the following:
- Certificate of Occupancy or equivalent issued by the local building authority
- 10 year Warranty Acceptance Letter AND Final Inspection by a VA Fee Inspector, VA Appraiser, or the local building authority.
- 1 set of construction exhibits (see Section 10.10 VA Lenders Handbook). Send to the Appraiser with the TAS-generated VA Form 26-1805-1
- Fully completed Builder’s Certification (HUD Form 92541)
OR
- A certification identifying the property, signed, and dated by technically qualified and properly identified individual (such as builder, architect, engineer, etc.) which states "I certify that the construction exhibits meet all local code requirements and are in substantial conformity with VA Minimum Property Requirements, including the energy conservation standards of the 1992 Council of American Building Officials’ Model Energy Code and the requirement for lead-free water piping."
- Veteran must sign "Description of Materials"
Documentation Update:
VA will now accept a Certificate of Occupancy (CO), or equivalent, issued by the local building authority in lieu of inspections that were formerly required to be performed by a VA Fee Inspector. Those changes are reflected above.
Ineligible Properties
- Located in Flood hazard area where flood insurance is not available
- Located in Coastal Barrier Resource System
- Located in certain airport noise zones
- Located in non-approved condo
- Leasehold condos
- Cooperatives
- Residential structures within a transmission line easement
- Ownership other than "fee simple" unless approved by VA
- Properties that are not primarily residential in nature and use
Remember: VA guarantees the loan, not the condition of the property. It is the purchaser’s responsibility to see that all components (i.e. heating, cooling, plumbing, etc) of the house are in proper working condition.
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