VA Loans, Department of Veterans Affairs

Navy, Marines, Coast Guard, Army, Air Force, National Guard, Reserves, & Spouses.

VA can help you Purchase a home at a competitive interest rate.  VA's Cash-Out Refinance Loan is for homeowners who want to take cash out of your home equity to take care of concerns like paying off debt, funding school, or making home improvements. The Cash-Out Refinance Loan can also be used to refinance a non-VA loan into a VA loan. VA will guaranty loans up to 100% of the value of your home.

Advantages

  • You can reuse the benefit.
  • 100% funding.
  • No private mortgage insurance.
  • Limits the amount you can be charged for closing costs.
  • No penalty for paying off early.
  • Ability to finance the VA Funding Fee.
  • VA loans are assumable.
  • Foreclosure avoidance support from the VA.
  • VA does not limit your purchase price, but for loans above the conventional limit, most buyers have to make a down payment for 25% or more.
  • VA funding fee, discounted for 1st time users and for disabled veterans.

Restrictions

  • Non-occupant Co-borrowers are not allowed.
  • Appraisals are typically more critical of the home.
  • Housing expense is calculated in the homes cost to attempt to keep defaults down.
  • Home cannot be in a flood zone.

IRRRL - Interest Rate Reduction Refinance Loan

No appraisal or credit underwriting package is required when applying for an IRRRL.  An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.  You may NOT receive any cash from the loan proceeds.

Eligibility

An IRRRL can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse the entitlement you originally used.

Additionally:

  • A Certificate of Eligibility (COE) is not required. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.

  • No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.

  • You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.

  • The occupancy requirement for an IRRRL is different from other VA loans. For an IRRRL you need only certify that you previously occupied the home.

Loan Limits

VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.  The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to four times a Veteran's available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price. Call for Loan Limits in your county.

VA Funding Fee

Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan's cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a:

  • Veteran receiving VA compensation for a service-connected disability, OR

  • Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR

  • Surviving spouse of a Veteran who died in service or from a service-connected disability.

The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage.  Guidelines change frequently, therefore, we do not guarantee accuracy.  Above is provided as a reference, to be confirmed with our team. Subject to change without notice.

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