The VA home loan program is one of the many benefits available to servicemembers and veterans. The following frequently asked questions and accompanying answers are provided to give you a better understanding of how the program works.
Can Anyone Who Has Served in the Military Get a Va Home Loan?
No. Servicemembers who have been dishonorably discharged from the military are not eligible for the program.
Other criteria for eligibility includes time in service. During wartime active duty, service members must have served at least 90 days; in peacetime, he or she must have served at least 181 days. Members of the Reserve or Guard component must serve at least six years, however, if the Reservist or Guardsmen has been called to active duty for more than 90 consecutive days, he or she does not need to meet the six-year requirement.
Please note that the above referenced time in service requirements pertain to the time periods of August 2, 1990, to the present. Please see General Rules for Eligibility on the VA's Web site if you are seeking criteria for dates prior to August 2, 1990.
What is a Certificate of Eligibility?
A Certificate of Eligibility (COE) is a VA-issued document that confirms that the servicemember or veteran meets the VA's eligibility criteria for a VA loan. You won't be able to get a VA loan without one.
For that reason, getting your COE is one of the first things you'll want to do when you're considering buying a home with a VA loan. You can find detailed information about COEs, including which documents are required for proof of service and the necessary steps you need to take to request a Certificate of Eligibility.
If I Get a Va Loan, Is the Government My Lender Instead of a Bank?
No. The lender will always be a bank or other financial institution. The VA is simply guaranteeing the loan, meaning that if you default on the mortgage, the VA guarantees that the lender will not take the financial loss.
Can a Lender Decline Me Even If I Have a Certificate of Eligibility?
Yes. Because the bank or other financial institution is providing the funding, they have the right to decline applicants who don't meet their predetermined criteria. Many people are under the false impression that if they are a veteran or have a Certificate of Eligibility, they will be automatically approved for a VA home loan.
However, if you are declined, keep shopping around as the criteria for approval varies among lenders. In fact, the VA encourages anyone applying for a VA home loan to apply with at least three different banks or financial institutions. Why? Because when you shop around you increase your chances of getting better terms, which includes interest rates.
What are VA Regional Loan Centers?
One of the primary duties of VA Regional Loan Centers (RLC) is to provide assistance to servicemembers and veterans. For example, if you have a question regarding your VA loan benefits, you would contact the Regional Loan Center that services your area.
Currently, there are nine VA RLCs that service the United States and U.S. territories.
Can My Va Home Loan Benefits Be Transferred to My Children?
No. VA home loan benefits cannot be transferred to children of current or former servicemembers.
Is It True That I Don't Need a Down Payment If I Get a Va Loan?
Yes, that is correct. However, the sale price of the home cannot exceed the appraised value of the property. And you'll still need to qualify for the amount you wish to finance.
Am I Charged a Penalty If I Pay off the Loan Early?
No. there are no prepayment penalties on VA loans.
If I Get a Va Home Loan Does That Guarantee That the House I'm Purchasing Is Free of Defects?
No. A VA-backed home loan is not a guarantee that the house is free of defects. The VA loan is simply a guarantee to the lender that the VA financially backs the loan should the borrower default on the mortgage.
I Currently Have a Va Home Loan. I'm Thinking About Selling My Current Home and Purchasing Another. If I Do So, Can I Finance My New House With a Va Loan?
Yes, you can reuse your VA loan benefits.
I Am Not a First Time Home Owner. Can I Use My Va Loan Benefits on Future Home Purchases?
Yes. You do not need to be a first time home buyer to use your VA home loan benefits.
Can I Use My Va Loan Benefits to Purchase Homes With the Sole Intention of Using Them as Rental Properties?
No. However, you can purchase a property of up to four units, as long as you plan to live in one of the units.
If I Get a Va Loan and Decide to Sell My Home Can the New Buyer Assume the Loan?
Yes, VA loans are assumable as long as the buyer qualifies.
I Recently Retired From the Military. Can I Still Use My Va Loan Benefits?
Absolutely. Just like any other applicant, you will still need to acquire a Certificate of Eligibility and qualify for the mortgage.
Where Can I Find Additional Information on the Va Home Loan Program?
The VA offers an extensive amount of information. The following resources are an excellent place to start:
- Pre-Loan Frequently Asked Questions
- Overview of the VA Home Loan Program
- Steps in Getting a VA Loan
- VA Loan Limits and Example of How the Guaranty Is Calculated
If you still have questions or need help, please contact your Regional Loan Center.
Updated by Armin Brott, May 2016