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What is a VA Guaranteed Home Loan?

Veterans Affair Loans are available to millions of US veterans and provide them with the financial assistance that they may not qualify for otherwise. These VA loans can be used to purchase a house, townhouse or condominium. There are many advantages of a VA loan that are not offered by other loans. One advantage is that this type of loan tends to have lower interest rates and unlike other loans, prepaying on a VA loan holds no penalty. VA loans do not have a cap on the amount of money that can be borrowed. The lender ultimately decides on the amount that they will lend. Lenders typically include banks, savings and loans, and mortgage companies. Many times, lenders will loan up to $415,000.00 without requiring a down payment from the borrower. Entitlement for VA loans has increased over the years. This increase means that people who have previously taken out a VA loan may now be entitled to more than their previous entitlement. Borrowers may also remain eligible for any unused balance that was previously borrowed.

Once you have proven that you are eligible for entitlement in the VA Home Loan Guarantee Program you can begin the process of getting pre-approved for a loan by a qualified VA approved mortgage lender so that you can shop for the house of your dreams. For more information regarding VA Home Loan go to http://www.va.gov/

Specifically, a VA home loan can help veterans:

Buy a home or residential condominium
Build a home
Repair, alter or improve a home
Refinance an existing home loan
Buy a manufactured home with or without a lot
Buy and improve a manufactured home lot
Install a solar heating or cooling system or other weatherization improvements
Purchase and improve a home simultaneously with energy efficient improvements
Refinance an existing VA loan to reduce the interest rate
Refinance a manufactured home loan to acquire a lot

Are You Eligible for a VA Home Loan?

VA loans are available to many people who, unfortunately, are unaware of their eligibility for this loan. In order to qualify, a Certificate of Eligibility must first be obtained. In order to obtain a VA home loan, you must first fill out VA Form 26-1880, the request for your Certificate of Eligibility. This certificate is issued only through the Veterans Administration, and is the first step towards applying for your loan. Veterans, active duty, guard or reserve, and military spouses potentially qualify for this certificate. Keep in mind that the Certificate of Eligibility, while necessary, only allows an eligible individual to apply for a home loan; it does not guarantee a loan approval.

Eligibility for the Certificate is based on an individual’s (or a spouse’s) military service. Congress establishes eligibility with strict guidelines. Here are five common categories of those who normally qualify for a Certificate of Eligibility:

Wartime - Service During:

WWII: 9/16/1940 to 7/25/1947
Korean: 6/27/1950 to 1/31/1955
Vietnam: 8/5/1964 to 5/7/1975

You must have at least 90 days on active duty and been discharged under other than dishonorable conditions. If you served less than 90 days, you may be eligible if discharged for a service connected disability.

Peacetime - Service during periods:

7/26/1947 to 6/26/1950
2/1/1955 to 8/4/1964
5/8/1975 to 9/7/1980 (Enlisted)
5/8/1975 to 10/16/1981 (Officer)

You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions. If you served less than 181 days, you may be eligible if discharged for a service connected disability.

Service after 9/7/1980 (enlisted) or 10/16/1981 (officer)

If you were separated from service which began after these dates, you must have:

Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or
Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensable service-connected disability;
Been discharged with less than 181 days of service for a service-connected disability. Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.

Gulf War - Service during period 8/2/1990 to date yet to be determined

If you served on active duty during the Gulf War, you must have:

Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or
Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or
Been discharged with less than 90 days of service for a service-connected disability. Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

Active Duty Service Personnel

If you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.

Selected Reserves or National Guard

If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and

Were discharged with an honorable discharge, or
Were placed on the retired list, or
Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service, or
Continue to serve in the Selected Reserves

Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability.

You may also be determined eligible if you:

Are an un-remarried spouse of a veteran who died while in service or from a service connected disability, or
Are a spouse of a serviceperson missing in action or a prisoner of war

Note: Also, 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 6, 2003 that is received after December 15, 2004.

Eligibility may also be established for:

Certain United States citizens who served in the armed forces of a government allied with the United States in WW II.
Individuals with service as members in certain organizations, such as Public Health Service at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.

There are other VA Home Loan Safeguards

The VA may suspend from the loan program those who take unfair advantage of veteran borrowers, or decline to sell a new home or make a loan to an eligible veteran of good credit because of race, color, religion, sex, disability, family status or national origin.
The builder of a new home is required to give the purchasing veteran a one-year warranty that the home has been constructed to VA-approved plans and specifications. A similar warranty must be given for new manufactured homes.
In cases of new construction completed under VA or HUD inspection, the VA may pay or otherwise compensate the veteran borrower for correction of structural defects seriously affecting livability if assistance is requested within four years of a home loan guaranty.
The borrower obtaining a VA loan may only be charged the fees and other charges prescribed by VA as allowable.
The borrower can prepay without penalty the entire loan or any part not less than the amount of one installment or $100.
The VA encourages holders to extend forbearance if a borrower becomes temporarily unable to meet the terms of the loan.

If you plan on purchasing a home in California, you may qualify for a special Cal-Vet home loan.

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