1 VA Home Loan Guarantee Program Program Overview
2 Eligible Borrowers All veterans are eligible for VA home loan benefits if they served in the Army, Navy, Air Force, Marine Corps, Coast Guard, Reserves or National Guard, and were discharged under conditions other than dishonorable.
3 Minimum Service Requirements 90 days of active duty in wartime periods 181 days of continuous active duty for peacetime periods 6 years for Reserves and/or National Guard (or DD214 with Title 10 deployment for less than 6 years) Veterans who served less than the minimum required period may be eligible if discharged because of service related disabilities. An unmarried surviving spouse of an eligible service member who died as a result of service, or service connected injuries.
4 Common VA Terms Certificate of Eligibility (COE): The certificate provided by the VA to evidence a veteran s entitlement to participate in the VA Home Loan Guarantee Program; in order to get a Certificate of Eligibility, lenders can access the Automated Certificate of Eligibility (ACE) system on the internet to prove eligibility. Certificate of Reasonable Value (CRV): The certificate issued when the VA certifies the fair market value of the property, once the home is appraised. Entitlement: The dollar amount of loan guarantee that the VA provides to each eligible veteran.
5 Common VA Terms Lender Appraisal Processing Program (LAPP): Allows lenders who meet specific requirements to review all types of origination appraisals; Staff Appraisal Reviewers (SARs) can review existing, new construction, under construction and proposed construction cases, single family and multifamily. Funding Fee: The name of the fee the VA charges when a Veteran uses its Home Loan Guarantee Program; this fee is generally around 1.50% to 2.50% depending on whether it is your first VA loan; disabled veterans may be exempt from this fee.
6 Common VA Terms Notice of Value (NOV): This form is issued to the borrower in conjunction with an appraisal; every NOV includes an estimated reasonable value of the property, estimated economic life of the property and a list of any property related conditions and requirements necessary for VA loan guaranty.
7 VA Loan Limits The maximum loan amount can vary depending upon the location of the property. For standard balance loans, the maximum guaranty amount is $417,000, nation wide. For high balance loans, the maximum loan amount is county specific. A current, county specific, loan amount matrix can be located on VA s website.
8 Program Eligibility Owner Occupied Properties only 15 and 30 year fixed, and 5/1 ARMs are available 1 4 Units, Condos and PUDs are allowed Purchase and Refinances transactions are available
9 Program Highlights Criteria Maximum LTV/CLTV (Purchase) Maximum LTV/CLTV (Cash Out) Minimum FICO Score (Purchase) Minimum FICO Score (Cash Out) Loan Amounts $417,000 Loan Amounts $417,001 $700,000 (Including Funding Fee) Loan Amounts $700,001 $1,000,000 (Including Funding Fee) 100%/100% 100%/100% 100%/100% 90%/90% 90%/90% 90%/90% Not Allowed Reserves No Minimum No Minimum No Minimum Gift Funds Allowed Allowed Allowed Appraisal Standard VA Appraisal Standard VA Appraisal Standard VA Appraisal
10 Maximum Guaranty Loan Amount Loan Type Maximum Potential Guaranty Up to $45,000 50% of Loan Amount $45,001 $56,250 $22,500 $56,251 $144,000 All VA Loans 40% of the Loan Amount with a Maximum of $36,000 $144,001 $417,000 25% of the Loan Amount > $417,000 25% of the County Loan Limit
11 Guaranty Calculation Example #1 The veteran has full entitlement available and is purchasing a home for $300,000 where the county loan limit is $417,000: $417,000 X 25% = $104,250 Maximum Guaranty $300,000 X 25% = $75,000 Guaranty Required Since the Guaranty Required is less than the Guaranty Available, you may proceed as normal. No additional down payment is required.
12 Guaranty Calculation Example #2 The veteran used $48,000 of entitlement on a prior loan. They are retaining the property, therefore the guaranty may not be restored. They are purchasing a home for $240,000 where the county loan limit is $417,000: $417,000 X 25% = $104,250 Maximum Guaranty $104,250 $48,000 = $56,250 Available Entitlement $56,250 X 4 = $225,000 Maximum Loan Amount Because 25% is the required guaranty amount, and the veteran only has $56,250 of entitlement in this county, the maximum loan amount is $225,000 and the borrower will need a minimum of $15,000 down payment.
13 Funding Fee The Funding Fee is required to be paid at the time of closing. Funding Fees may be financed or paid from loan proceeds. The amount will vary based on the type of Veteran, down payment amount, transaction type, type of loan, etc When financing, the maximum LTV may be exceeded by the amount of the funding fee, but the maximum county loan limit may not be exceeded.
14 Funding Fee Certain borrowers are excluded from paying the Funding Fee: Veterans receiving service connected compensation Those who would be receiving service connected compensation, but are instead receiving military retirement pay Surviving spouses of veterans who died in service, or from service connected causes
15 Funding Fee Funding Fees* Type of Veteran Down Payment Purchase Percentage for First Time Use Refinance Percentage for First Time Use 0% 4.99% 2.15% N/A Regular Military 5% 9.99% 1.50% N/A 10% or More 1.25% 2.15% 0% 4.99% 2.40% N/A Reserves and National Guard 5% 9.99% 1.75% N/A 10% or More 1.50% 2.40% *Different funding fees apply for subsequent use.
16 Funding Fee Calculation Example #1 The Veteran has full entitlement available and is purchasing a home for $300,000 where the county limit is $417,000. They are eligible for 100% financing and would like to put no money down: $300,000 X 2.15% = $6,450 Funding Fee $300,000 + $6,450 = $306,450 Total Loan Amount Since the combined loan amount (including the Funding Fee) is less than the county maximum of $417,000, the funding fee can be financed into the loan amount. The final LTV for this transaction will be %.
17 Funding Fee Calculation Example #2 The Veteran has full entitlement available and is purchasing a home for $410,000 where the county limit is $417,000. The Veteran is eligible for 100% financing and would like to put no money down: $410,000 X 2.15% = $8,815 Funding Fee $410,000 + $8,815 = $418,815 Total Loan Amount Since the combined loan amount (including the Funding Fee) is more than the county maximum of $417,000, the entire funding fee cannot be financed into the loan amount. The borrower will have to bring in at least $1,815 for down payment and the final LTV for this transaction will be %.
18 VA IRRRL VA Interest Rate Reduction Refinance Loans (IRRRLs) can reduce the interest rate of an existing VA loan, or to convert an existing VA Adjustable Rate Mortgage into a Fixed Rate. If you are familiar with FHA Streamline Refinances, this program is very similar.
19 IRRRL Program Eligibility Any Veteran who has an existing VA loan can obtain a VA IRRRL. There are no income or asset verifications required. If must be verified that: The interest rate, and P&I payment, is decreasing, or The term of the loan is decreasing.
20 IRRRL Program Highlights 620 Minimum FICO Score The new loan amount may not exceed the lesser of the CRV, or the outstanding balance of the loan, plus allowable closing costs. Mortgage Payment History must show 0 X 30 in the last 12 months.
21 IRRRL Program Highlights $500 Maximum Cash Back to the Borrower The term of the loan is the lesser of 30 years, or the remaining term of the current loan, plus 10 years, rounded down to the nearest 5 year increment. High Priced Mortgage Loans (HPMLs) are not permitted.
22 IRRRL Appraisal Requirements Property Type 1 Unit (including PUDs) Condos 2 4 Units Minimum Appraisal Report Required 2055 Exterior Only Inspection Residential Report 1075 Exterior Only Inspection Individual Condominium Unit Appraisal Report 1025 Small Residential Income Property Appraisal Report The 2055/1075 must be changed to an interior and exterior report if any of the following conditions exist: The property does not conform to the neighborhood, or Adverse physical deficiencies or environmental conditions are observed, or Data sources do not provide sufficient information about the property to perform the appraisal.
23 IRRRL Credit Qualifying If the proposed housing payment increases over 20% of the current housing payment, the veteran must credit qualify. The only time the payment can increase is if: Converting an ARM to a Fixed, or The term of the loan is decreasing.
24 IRRRL Funding Fee The Funding Fee for all VA IRRRL Transactions is 0.50% This fee may be financed into the loan amount.
26 VA Processes Pricing is available on page 2 of the WesLend rate sheet. Eligibility can be run in Broker Connection, and loans can be locked online. VA Turn Times will fall under the standard Government turn times, posted on page 1 of the rate sheet. Please refer to the submission checklist, posted in the Underwriting tab, of the Online Forms section of
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