VA CREDIT QUESTIONS AND ANSWERS

• QUESTION: Is the VA more lenient on credit for Veterans?
  
  ANSWER: As a general rule the VA is more lenient but all the general VA underwriting guidelines still apply. However, the VA is usually more willing to overlook some circumstances beyond your control
• QUESTION: I filed bankruptcy. How long before I can get a loan?
  
  ANSWER: The VA requires that the bankruptcy be discharged for at least 2 years and your credit has been good since the discharge.
• QUESTION: Can married Veterans combine their eligibility?
  
  ANSWER: Yes, however, when acquiring property jointly, the amount of loan guarantee my not exceed the lesser of 40% of the loan amount or $36,000. In some cases that may increase to $89,912 for certain loans over $144,000. Our lenders can help you determine that.
• QUESTION: I've had a few late payments in the last several months. Can I still get approved for a VA loan?
  
  ANSWER: The general rule is when satisfactory payments will have been made on all credit accounts, including a mortgage, for a period of 12 months form the last recorded derogatory credit reporting. A VA underwriting will look strongly at the overall payment pattern rather than isolated periods of slow pays due to intermittent periods of financial difficulty.
• QUESTION: I haven't established any credit. Will the VA consider approving me for a VA Home Loan?
  
  ANSWER: In most cases, the lack of an established credit history should not be a deterrent to loan approval. VA guidelines allow for some non-conventional accounts to be used to establish a credit history. Some of these account items include satisfactory payment history on rent, utilities, phone bills, etc
• QUESTION: I haven't established any credit. Will the VA consider approving me for a VA Home Loan?
  
  ANSWER: In most cases, the lack of an established credit history should not be a deterrent to loan approval. VA guidelines allow for some non-conventional accounts to be used to establish a credit history. Some of these account items include satisfactory payment history on rent, utilities, phone bills, etc
• QUESTION: I have a bankruptcy on my record. Will that affect getting approved for a VA Mortgage Loan?
  
  ANSWER: A borrower whose previous residence or other real property was foreclosed on or given a deed-in-lieu of foreclosure within the previous 2 years since the disposition date is generally not eligible for a VA insured mortgage. If the foreclosure was on a VA loan, the applicant may not have full entitlement available for the new loan.
• QUESTION: My debt ratio is pretty high. What does my ratio's need to be to get approved for a VA Loan?
  
  ANSWER: The VA guidelines are pretty strict on debt ratio. Your combined debt which includes all your reoccurring monthly payments such as car payments, credit cards etc. plus your new proposed payment (including taxes & hazard insurance), divided into your gross monthly income cannot exceed 41%.
• QUESTION: My credit score is under 500. Is there a chance of getting approved for a Veterans Home Loan?
  
  ANSWER: Typically the VA likes to see a credit score of at lease 620 or higher. However, the VA Underwriting guidelines allow the underwriter to consider compensating factors that may have led to the decline in your credit score weighed against the present upside of where your currently are financially and whether or not the potential going forward indicates the ability to make the payments on the new loan.
  

VA REFINANCE QUESTIONS

• QUESTION: When I refinance to pull cash out, can I shorten or lengthen the term of my existing loan in the process?
  
  ANSWER: Yes, you can start your new loan at the number of years you originally had left, extend the amortization back out to a 30 year, or shorten the amortization to either a 25,20, 15 year loan term.
  
  
• QUESTION: If I am currently on a ARM (Adjustable Rate Mortgage), could I change my loan program to a fixed rate loan or vise versa?
  
  ANSWER: Yes, you can adjust your loan program to any of the offered VA Loan programs to include a fixed rate or a 2,3 or 5 year ARM.


• QUESTION: Are there costs associated with a Cash-Out Refinance? (See Typical Costs Here)
  
  ANSWER: Yes, there are typical closing costs associated with refinancing. However, unlike most other loan types, the advantage of doing a VA Loan is that the government controls and limits the fees a lender can charge so the your never overcharged or taken advantage of.
• QUESTION: What kind of debts can I pay off with a VA Debt Consolidation Refinance?
  
  Answer: You can pay off 2nd mortgages, credit card debt, various loans such as student loans, car and RV loans or any other obligation paid on a monthly basis.
• QUESTION: If I currently have a Conventional or FHA loan, can I refinance into a VA Loan?
  
  Answer: Yes, provided you have VA liability earned from serving in one of the branches of the Armed Services.
• QUESTION: What is the maximum loan to value (LTV) for VA Debt Consolidation Refinance loan?
  
  Answer: The maximum Loan To Value is 90% of the appraised value of the property.
• QUESTION: Does the VA offer 2nd mortgages to pay off debt?
  
  Answer: No, the VA only offers Debt Consolidation Refinances where that loan is in first position on the property title.
• QUESTION: Can I get cash out or consolidate my dept by refinancing my multi-family residential property?
  
  ANSWER: Yes, however, the total number of separate units cannot total more then 4 if one veteran is buying the property If more than one veteran is buying the property together, you may add one unit for each veteran. Example: If two veterans are purchasing the property, there could be as many as 6 units and so on. However, if the rents are needed to qualify for the loan, the participating veterans must show experience in being a landlord and have at least 6 months payment reserves in the bank at the time of closing.

VA STREAMLINE REFINANCE

• QUESTION: Can I pull cash out or consolidate debts using the VA Streamline Refinance Programs?
  
  ANSWER: No, The VA Streamline Refinance was designed to simply lower your interest rate and payment. This program will only allow the current mortgage balance to be refinanced.
• QUESTION: Are there any costs to me associated with the VA Streamline Refinance program?
  
  ANSWER: All the costs associated with a VA Streamline Loan are paid by the lender with the exception of the VA assessed funding fee, you interim interest from the date of closing, and the prorated taxes and home owners insurance deposits (escrows). After the VA streamline loan is closed, the borrow will receive a check back from the former lender reimbursing the borrower for escrowed taxes and insurance that is being held and in escrow by the old lender. However, the VA Funding fee is not an out-of-pockets expense and can be added to the loan amount.
• QUESTION: Does the borrower have to re qualify for a VA Refinance Loan?
  
  ANSWERS: No. As long as your existing mortgage payments are current and there haven't been excessive 30 day late payments in the past 12 month, and as long as there are no judgments or liens against you, you should be able to get approved for a VA Streamline Refinance.
• QUESTION: Is there a new appraisal required when doing a VA Streamline Refinance?
  
  ANSWER: No. The current appraised value of the home is not required because of the fact that the VA Streamline Refinance Program does not allow an increase in the present mortgage balance (except for the new VA funding Fee) or allow cash out or debt consolidation which would increase the current loan balance.

VA NEW PURCHASE QUESTIONS AND ANSWERS

• QUESTION: What are the current VA maximum loan limits?
  
  ANSWER: The present VA loan amount with zero down payment in the US is $417,000. This figure may vary for state to state and possibly various cities within a state.
• QUESTION: Am I required to occupy the property after I purchase a home with a VA Loan?
  
  ANSWER: Yes. The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.
• QUESTION: What type of property can a VA Loan be used for?
  
  ANSWER: To buy a home, a condominium unit in a VA-approved project, or to purchase a unit in a cooperative (co-op). A VA Loan may also be used to purchase a manufactured home.
• QUESTION: How much can a seller pay towards my closing costs?
  
  ANSWER: A seller can pay a Sellers Concession up to 4% of the loan amount.
  
• QUESTION: Is there really no down payment, 100% financing available when purchasing a home with a VA Loan?
  
  ANSWER: No. The VA does not require a down payment for eligible Veterans and Service Members.
• QUESTION: If a married couple are both Veterans, can we combine our VA Eligibility to qualify for a larger VA Mortgage Loan?
  
  ANSWER: Yes, however, when acquiring property jointly, the amount of loan guarantee my not exceed the lesser of 40% of the loan amount or $36,000. In some cases that may increase to $89,912 for certain loans over $144,000. Our lenders can help you determine that.

• QUESTION: Can I get a VA Loan for the purchase of a multi-family property?
  
  ANSWER: Yes, however, the total number of separate units cannot total more then 4 if one veteran is buying the property If more than one veteran is buying the property together, you may add one unit for each veteran. Example: If two veterans are purchasing the property, there could be as many as 6 units and so on. However, if the rents are needed to qualify for the loan, the participating veterans must show experience in being a landlord and have at least 6 months payment reserves in the bank at the time of closing.
• QUESTION: Does a VA Mortgage require mortgage insurance?
ANSWER: No. One of the nice things about a VA Mortgage is there is no monthly or annual mortgage insurance like there is on most other types of loans. However, the Veteran is required to pay a VA Funding Fee which in most cases is added to the mortgage amount. The current VA Funding fee for a no down payment is 2.15% fee, up to 10% down payment requires a 1.5% fee, and 10% or more requires a 1.25% fee. For subsequent users, no down payment requires a 3.3% fee, up to 10% down payment requires a 1.50% fee, and 10% or more requires a 1.25% fee.


• QUESTION: Is it true that once I have purchased my home with a VA loan and down the road the market interest rate is lower than my current rate I can do a VA Streamline Refinance Loan with no out-of-pocket costs?
ANSWER: Yes. Being able to continually capitalize on current interest rates without having to re-qualify, reappraise the property or pay expensive refinance costs is probably the best feature associated with using your eligibility to purchase a home with a VA loan. In most cases, the lender pays the actual costs of refinancing for you and the only cost required the borrower is typically asked to pay is the VA funding fee which is usually added to the new loan amount.


• QUESTION: I am a widow of a Veteran. Can I still use my deceased spouses eligibility to buy or refinance out home?
  
  ANSWER: Yes. Provided the you were married to the eligible Veteran or Service Member at the time of the death.
  
• QUESTION: Where can I get my Certificate Of Eligibility?
ANSWER: The major criteria for getting a VA home loan is to secure a copy of your Certificate of Eligibility which shows your current VA eligibility status. Our VA loan specialists can help you obtain this certificate or you can go to the VA home page at http://www.homeloans.va.gov/elig1.htm and request the VA form number 26-1880.


• QUESTION: I filed bankruptcy. How long before I can get a loan?
  
  ANSWER: The VA requires that the bankruptcy be discharged for at least 2 years and your credit has been good since the discharge.See "Credit Questions" on this page for more credit information.
• QUESTION: I am a Veteran and my credit is not the best. Can I still get approved for a VA Loan?
ANSWER: VA Loan Underwriters and VA Mortgage Lenders are bound by the VA credit guidelines and regulations but try everything possible to get a VA Loan Approval when there are credit issues involved. See "Credit Question" on this page for more credit information


• QUESTION: When I purchase a home using VA Loan financing, do I have to occupy the property?
  
ANSWER: Yes, the Veteran must certify that a property purchased by the Veteran will be occupying the property. The exception to this rule is the IRRL's (VA Streamline Refinance) which only requires the Veteran to certify that they have previously lived in the home

VA ELIGIBILITY QUESTIONS AND ANSWERS

• QUESTION: How do I apply for a VA guaranteed loan?
  
  ANSWER: You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan.
• QUESTION: How do I get a Certificate of Eligibility?
  
  ANSWER: Complete a VA Form 26-1880, Request for a Certificate of Eligibility: You can apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880, Request For A Certificate of Eligibility For Home Loan Benefits, to the Winston-Salem Eligibility Center, along with proof of military service. In some cases it may be possible for VA to establish eligibility without your proof of service. However, to avoid any possible delays, it's best to provide such evidence.
• QUESTION: Can my lender get my Certificate of Eligibility for me?
  
  ANSWER: Yes, it's called ACE (automated certificate of eligibility). Most lenders have access to the ACE (automated certificate of eligibility) system. This Internet based application can establish eligibility and issue an online Certificate of Eligibility in a matter of seconds. Not all cases can be processed through ACE - only those for which VA has sufficient data in our records. However, veterans are encouraged to ask their lenders about this method of obtaining a certificate.
• QUESTION: What is acceptable proof of military service?
  
  ANSWER: If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost.
  
  If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge From Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A photo copy is all you need.
  
  If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which shows your date of entry on your current active duty period and the duration of any time lost.
  
  If you were discharged from the Selected Reserves or the National Guard, you must include copies of adequate documentation of at least 6 years of honorable service. If you were discharged from the Army or Air Force National Guard, you may submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting, or it’s equivalent. If you were discharged from the Selected Reserve, you may submit a copy of your latest annual points statement and evidence of honorable service. Unfortunately, there is no single form used by the Reserves or National Guard similar to the DD Form 214. It is your responsibility to furnish adequate documentation of at least 6 years of honorable service.
  
  If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented.
• QUESTION: How can I obtain proof of military service?
  
  ANSWER: Standard Form 180, Request Pertaining to Military Records, is used to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is NOT processed by VA. Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.
  
• QUESTION: I have already obtained one VA loan. Can I get another one?
  
  ANSWER: Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send VA a completed VA Form 26-1880 to the Winston-Salem Eligibility center.
• QUESTION: I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan?
  
  ANSWER: In this case the veteran’s eligibility can be restored only if the qualified assume is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assume has paid off the VA loan.
  
• QUESTION: My prior VA loan was assumed, the assume defaulted on the loan, and VA paid a claim to the lender. VA said it was’t my fault and waived the debt. Now I need a new VA loan but I am told that my used eligibility can not be restored. Why?
  
  ANSWER: Although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.
• QUESTION: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have my used eligibility restored. Why?
  
  ANSWER: Although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.
• QUESTION: Only a portion of my eligibility is available at this time because my prior loan has not been paid in full even though I don’t own the property anymore. Can I still obtain a VA guaranteed home loan?
  
  ANSWER: Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.
• QUESTION: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
  
  ANSWER: The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death), may obtain a VA guaranteed interest rate reduction refinance loan.
  
  A surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit. However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 16, 2003 that are received after December 15, 2004.
  
• QUESTION: Are the children of a living or deceased veteran eligible for the home loan benefit?
  
  ANSWER: , the children of an eligible veteran are not eligible for the home loan benefit.
  
• QUESTION: I am a Veteran with a VA loan. Do I have to occupy the property?
  
  ANSWER: Yes, the Veteran must certify that a property purchased by the Veteran will be occupying the property. The exception to this rule is the IRRL's (VA Streamline Refinance) which only requires the Veteran to certify that they have previously lived in the home
• QUESTION: My wife got the house in divorce. Can I get my eligibility back?
  
  ANSWER: The only way of the getting the eligibility back is to sell or for the non-eligible spouse to refinance the home which will then release the eligibility back to the veteran.
• QUESTION: Can I get a VA loan to buy a multi-family residential property?
  
  ANSWER: Yes, however, the total number of separate units cannot total more then 4 if one veteran is buying the property If more than one veteran is buying the property together, you may add one unit for each veteran. Example: If two veterans are purchasing the property, there could be as many as 6 units and so on. However, if the rents are needed to qualify for the loan, the participating veterans must show experience in being a landlord and have at least 6 months payment reserves in the bank at the time of closing.
• QUESTION: Can married Veterans combine their eligibility?
  
  ANSWER: Yes, however, when acquiring property jointly, the amount of loan guarantee my not exceed the lesser of 40% of the loan amount or $36,000. In some cases that may increase to $89,912 for certain loans over $144,000. Our lenders can help you determine that.

THE FOLLOWING ARE LINKS THAT WILL ACCESS ELIGIBILITY FORMS AND CONTACT INFORMATION FOR MORE INFORMATION ON VA ELIGIBILITY:

Request for a certificate Of Eligibility - Form 26-1880
Proof Of Military Request form: Standard Form 180

Contact Information Winston-Salem Eligibility Center:

Winston-Salem Eligibility Center

Address:

PO Box 20729
Winston-Salem, NC 27120

Phone: 1-888-244-6711