VA Loan Entitlement: Everything You Need to Know

One of the major benefits of your service in the military is acquiring a VA home loan guaranteed by the U.S Department of Veterans Affairs. What’s more, is that you possess more buying power in 2022 compared to previous years. When the VA program started, only returning Veterans and those on active duty were qualified for the VA loan. However, modifications have been made recently to include surviving spouses of veterans, those who were honorably discharged, members of the National Guard and the Army Reserve, and some cadets. Understanding what your VA loan entitlement entails may help you secure a home with little or no down payment. Here’s everything you need to know about the VA loan entitlement.

The VA Loan Entitlement Explained

The VA loan entitlement is a fraction of your loan the VA will repay should you default or fail to pay your loan. In simple terms, it is the maximum amount repaid to your lender by the VA in case you default on your loan. The VA loan entitlement is not the total VA loan you can get or the payment made to you. It is simply a reference made to the maximum guarantee the VA provides to the lender. The benefit of a VA entitlement is that you are not required to make a down payment. If you meet the stipulated loan requirements, most financial institutions can provide you loans that exceed the amount of your basic entitlement without requesting a down payment. This is because the guarantee is usually backed by the government. VA entitlement is associated with the VA guarantee and it is similar to mortgage insurance on various loan types. The VA guarantee does not function like those backed by the Federal Housing Administration (FHA) and it is not included in your monthly or annual payment. Instead, the total guarantee is determined by your VA entitlement and your loan amount.

Types of VA Loan Entitlement

There are primarily two types of entitlement offered by the VA. They include basic and bonus entitlement. Here’s what they entail.

Basic Entitlement

The basic entitlement is centered on the premise that the VA will pay your borrower an amount up to $36,000 or 25% of your VA low amount should you fail to pay. Usually, when you try accessing your VA loan entitlement, you come across $36,000 as the Standard amount, but this does not mean you can’t borrow more than that. Most mortgage firms would allow you to borrow up to $144,000 with no down payment.

Bonus Entitlement

The VA bonus entitlement is also referred to as second-tier entitlement. It grants you the ability to loan above the $144,000 basic limit, that is, you can purchase a better and more expensive home with the VA bonus entitlement. Recently, adjustments have been made to the loan limits established by the Federal Housing Finance Agency (FHFA) due to the rising cost of houses. Veterans can now access loans to a tune of $647,200 and close to $1,000,000, giving you an edge in the real estate market.

How Can They Work Together

Whether you are purchasing, refinancing, or building a home, you can either use your basic or bonus VA entitlement. The new VA bonus entitlement guidelines stipulate that you can request a loan to purchase a home that is above the $647,200 loan limit for high-cost areas. For instance, if you have a full entitlement and want to buy a home in an expensive neighborhood for $1.2 million, which is above the limit of $647,200. The VA guarantee will cover 25% of the loan amount (1.2 million). Hence, should you default, the VA is guaranteeing to repay the VA-approved lender about $300,000. The more reason why you don’t need to make a down payment before your loan is disbursed. However, it’s important to bear in mind that a full entitlement doesn’t equate to an automatic approval for VA loans. The banks or mortgage institutions set their guidelines that must be met before considering you for approval. So ensure you communicate with your loan officer, especially if you’re purchasing an expensive home, to confirm if you qualify for their lending requirements.

Minimum Service Requirement to Qualify

There are some service requirements stated by the government for those on active duty or veterans and it also extends to military spouses. Before requesting a VA loan, you need to ensure you are eligible. Here are some of the basic requirements:
  • You are a veteran, met the minimum service requirement, and were discharged honorably.
  • Served 90 or more active days during the period of war or at least 181 consecutive active days of service during peacetime.
  • Served for a minimum of six years in the National Guard or Selective Reserve.
To apply, you need to have a VA Certificate of Eligibility (COE). You will not be granted a loan without this certificate.

What if My Spouse Died in the Line of Duty?

You may be eligible for a VA loan if your spouse died in the line of duty. Also, unremarried spouses of veterans who died while actively serving are eligible. However, to access the VA loan, you will have to prove that you’re getting dependency and indemnity compensation. If you’re not receiving this compensation, you will need to request a copy of the Report of Casualty statement (DD 1300) from the military and a duplicate of your marriage certification.

What Documents Do I Need?

There is different information you will need to provide for you to apply for a VA loan, and this is also in line with your current position. Veterans will be required to provide a DD Form 212, while active service individuals will provide a signed statement of service which must contain the following:
  • Your Full Name
  • Date of Birth
  • Social Security Number
  • Duty Start Date
  • Lost Time (if any)
  • Name of Command Providing the Details
For National Guard or Reserve members, and also surviving spouses, the requirements may be different. You can access more details through the VA’s entitlement site, or contact a qualified lender. In addition, if you’re seeking a VA loan COE, you can get it by applying through your eBenefits portal online or apply via your lender.

How is a VA Loan Entitlement Estimated?

If you have full entitlement, you don’t have a loan limit, so you don’t need to work yourself estimating how much entitlement is available to use. You can request as much as your lender offers without a downpayment. On the contrary, if you have used part of your entitlement and you need to know your balance, you will have to determine how much you’re currently using. Recall that the VA will pay up to 25%of your loan. So to ascertain the amount you have used out of your entitlement, just multiply your current loan amount by 0.25. Current loan amount x 0.25 = Entitlement already used. In addition, you will need to figure out your country’s conforming loan limit. Previously, it was $548,250, but as of 2022, the limit is at $647,200 and may be higher in expensive areas.

How Can You Use a VA Bonus Entitlement?

Bonus Entitlement can help you secure a more lush and expensive home. However, it can also use for the following:
  • Purchase a New Home With a Past Foreclosure: You can use your VA Bonus Entitlement for a new home in the future. Your past foreclosure doesn’t hinder you as long as two years have already passed since the foreclosure.
  • Purchase a Second Home With VA Financing: Suppose you are transferred to another region or military base with no prior notice, you may certainly want to use your VA home loan benefits to purchase a new home. With a bonus entitlement, you can purchase a new home with no down payment. Hence, you don’t have to worry about seeking a buyer for your current home.

How Does the Loan Entitlement Step Fit Into the Whole VA Loan Process?

Firstly, you should note that ascertaining your loan entitlement helps in determining the amount of loan you are eligible for and how much consideration your lender will place in approving your loan. If you have a loan you’re still repaying or you default on a previous VA loan, or you’ve paid but are still, in possession of the home you bought with the loan, you will be having a reduced entitlement.  This implies that the guaranty on your loan is limited to the conforming limit after deducting your current entitlement. On the other hand, if you have a full entitlement, which occurs when you have never received a VA mortgage loan or you have completely paid the previous VA loan and sold the house. You will be entitled to borrow above the basic entitlement of $144,000 without a downpayment and conforming limits. Furthermore,  the VA will guarantee 25% of the loan received.

How Can You Restore Your VA Entitlement?

It’s essential you know how to restore your VA entitlement since it affects how much a loan can be borrowed. This process will require you to fill out the VA Form 26-1880 to restore your VA entitlement. You will be required to restore your eligibility when:
  • You have sold your home but your eligibility is yet to be restored
  • You are receiving equity with a VA cash-out refinance.
  • You have paid off the VA loan on a different home you still own.

How to Choose the Best Lender to Help You Through This Process

To easily get a hand on the working and functioning process needed to acquire a VA loan, you need the assistance of a trusted, experienced, and proficient lender. At Security American Mortgage, we specialize in assisting you to go through the VA loan process with ease. We pride ourselves in disbursing affordable mortgages to our active service members, veterans, and their families. Contact us to communicate with our designated agent and let’s walk you through getting your VA loan.

Conclusion

The VA loan entitlement has aided many veterans and military personnel to own a place they can call their home. This has been one of the ways the US government is giving back to these honorable men for their service to the state. If you are a veteran, active service member, or spouse /family of a recognized service member who died in the line of active duty, you may be eligible for a VA loan entitlement. Contact us for further clarifications and inquiries. We look forward to helping you figure out the next step in securing your home.

Whats Is a VA Loan Statement of Service?

When applying for a VA home loan, the statement of service letter is one of the essential documents you need to possess. It provides lenders with the required details about your military service status and also enables your income verification. If you do not have the VA loan statement of service letter, you will not be able to obtain a VA loan due to delayed receipts that come from not having this letter. In this expert guide, we will be explaining what a statement of service letter is, what it does, its importance, and how to write the service letter expertly.

The VA Statement of Service Explained

The VA statement of service for a VA loan is a letter that ascertains a military service member’s present or past employment in the military. It is a unique form and one of the employment verification options required in the mortgage process of obtaining a VA home loan. The letter contains vital information that mortgage lenders require, including pay rate, service dates, discharge status, and other information. It is a supplement to your Certificate of Eligibility and personal information.

Why is a VA Loan Statement of Service for a VA Loan Required?

The statement of service letter is required to help lenders assess how much you earn and determine if you qualify for a loan and the loan amount. Income verification is a crucial step when you apply for VA loans and the statement of service letter provides this detail. If you are still working active duty in the military, mortgage lenders will seek 12 months of guaranteed income, compared to the 24 months of proof pay they require from non-military members. Your statement of service will indicate information about other pays if you have one and the time duration expected to receive them. All in all, the statement of service letter is required to help lenders ascertain if you qualify for a VA loan and also process your loan.

When is a VA Loan Statement of Service for a VA Loan Required?

You will be required to generate a statement of service letter when:
  • You are less than 12 months on the ETS date to indicate that you’re eligible to reenlist and when you have no re-enlist restrictions.
  • Your Certificate of Eligibility is not available online and it is required to request the COE from VA.
  • You are using a reservist’s pay which would indicate how many drills the borrower has participated in if you participated in annual active duty for training (occasionally two weeks and one weekend per month), and your active reservists training with units all through the year.
  • You are using other pay differently from BAH, Base, and BAS. Proof pay will continue after a 12-month plus closing.

What a VA Loan Statement of Service for VA Loan Includes

Certain prerequisites need to go into the statement of service letter. The following information should be included in a typical statement of service letter:

Official Letterhead

A military letterhead helps show that your letter is directed from someone in the military who is aware of your service. If your service letter does not come with a letterhead, there is no way lenders can determine if you served and your ability to come to terms with the VA loan requirements. Your commanding officer can provide you with an official letterhead when forming your statement of service letter.

Date

The date on which the statement of service letter is drafted and signed must be included. This is legally termed a dated signature and it is signed by both you and your commanding officer. Also, your service rank date must be entered in the service letter.

Relevant Information

Your commanding officer will provide details of your date of birth, active duty current date, current deployment, rank, separation date, and other relevant information that pertains to your service. Your statement of service letter should also contain any additional military-related income sources such as flight pay, special duty pay, and parachute play. It should also include your discharge status and state your ability to re-enlist should you desire reenlistment. Each piece of information stated in your statement of service letter is used to further validate your eligibility to obtain VA home loans. Here is a list of some of the relevant information that should be included in your VA Statement of service letter:

Name of Service Member

The service member is commonly used to mean an active member of the armed forces, including the National guard, or a person who is separated from military service in the past 18 months due to discharge, retirement, or another kind of separation. Your name as a service member is one of the vital information that must be included in your statement of service letter

Social Security Number

Your social security is another relevant piece of information that must be included in your statement of service. The SSN is your unique identity as a citizen of the United States and it helps lenders with your VA loan process.

Date of Birth

To tell your current age, your date of birth is required in your statement of service letter.

Branch of Service

The branch of service tells which area you are currently serving or serving. Whether you served in the Air Force, Marine Corps, Army, Navy, Coast Guard, or the Space Force, your branch of service must be included in your letter.

Active-Duty Service

Information about your full-time job completion is required in your service letter.

Expected Discharge or Release Date

The time frame to indicate when your active duty service will come to an end is included in the statement of service letter. It is generally referred to as your expected discharge or release date.

Expected Character of Discharge: Honorable

Your mode of discharge plays a huge role in enabling you to secure a VA home loan. One essential criterion is that you are honorably discharged. When stated otherwise, it hampers your success in obtaining a VA loan.

Decorations, Medals, Badges, Citations, and Campaign Ribbons 

Every medal, badge, citation, and decoration accorded to you during your service goes a long way to stimulate your VA loan application when included in your statement of service. It is another important piece of information to be included in your service letter.

Military-Related Sources of Income 

Your service letter is expected to include other military-related sources of income such as parachute pay, special duty pay, and flight pay.

Commander Information Contact

The contact of your commanding officer should be included when drafting your service letter. This is required in case of further verification and some necessary updates regarding your service.

VA Loan Statement of Service Letter Checklist

Aside from the above-listed requirements, there is other vital information that checks your statement of service letter. The checklist includes:
  • Letterhead
  • Date
  • Borrower’s Full Name
  • Date of Birth
  • Social Security Number
  • Rank
  • Branch of Service
  • Date Entered on Active Duty
  • Unit of Assignment and Current Duty Station Duration
  • Duration of Time Lost
  • Current Separation Date
  • Last Discharge
  • If Reserves, Whether Borrower is Active or Inactive Status
  • Whether Flagged or barred From Continued Service
  • If Eligible to Reenlist
  • Other Pay Amounts
  • Signature and Title of Signer

Conclusion

A detailed statement of service letter can help you accelerate your application for VA loans. The service letter doesn’t follow a particular format, but it must include all relevant information required to validate your service duty. At Security American Mortgage, we help ensure you have all the detailed documents to enable your VA home loan application prompt. Contact us for more inquiries regarding your statement of service letter and applying for VA home loans.

FHA vs VA Loan: What’s the Difference and Which One Is Right For You?

Nowadays, various types of mortgages are available when you decide to buy a home. However, the more options you get, the more difficult it can be to choose the right one. Each mortgage option comes with different terms, advantages, and disadvantages, depending on the type of property you want to purchase and your credit history. Two common types of mortgages include the Federal Housing Administration (FHA) loan and the VA loan, both insured by the government and granted by banks or agency-approved lenders. Understanding the different types of loans at your disposal helps you choose one that provides you with the most convenience and flexibility. Not having proper knowledge of these loans can put you in a tight spot with higher interests and unaffordable monthly payments and might also put a stopper on your dream of owning a home. We have created this guide to help you understand the difference between FHA and VA loans and let you decide which one suits your needs better.

What are Federal Housing Administration (FHA) Loans?

A Federal Housing Administration loan is a type of home mortgage covered by the federal government and approved by a financial institution or lender. Compared to conventional home loans and mortgages, FHA loans have a much lower down payment requirement. The best thing about this type of home loan is that it also has a lower credit score requirement than other loans. The low credit score requirement makes it easier for low or moderate-income families to buy their first home without worrying about making a hefty down payment or maintaining a good credit score. Moreover, since the government insures these loans, banks are willing to loan more money to low-income homebuyers who don’t have enough money for a down payment.

What are VA Loans?

Like FHA loans, a VA loan is a type of home mortgage that the government backs, particularly the US Department of Veteran Affairs (VA). They are also lent by banks, lenders, and other financial institutions approved by a mortgage approval agency. VA loans are specially designed to help people serving in the military, veterans, and military spouses. The United States government introduced the VA loan in 1944 to help service members buy a home without putting a high down payment or needing excellent credit. So far, the program has lent money to more than 25 million veterans and service members to buy their first home or refinance a property. It is much more flexible than other traditional forms of home loans and mortgages.

Requirements for FHA Loans

The Federal Housing Authority (FHA) has also been around for several decades, and it has helped millions of people buy their first homes. The program makes it possible for banks and other conventional lenders to help low and mid-income households buy a home, but the government assures the loans, providing lenders relief and trust. In the event of non-payment by the borrower, the FHA is required to intervene. Since the government backs FHA loans, lenders are much more lenient regarding credit scores, and they offer loans to people who don’t have a perfect credit history. Lenders are also willing to give out loans at a reduced interest rate, making it easier for FHA borrowers to make payments according to their budget. Moreover, FHA borrowers have the freedom of getting home without placing a huge down payment, which relieves them from the worries of saving enough money. However, FHA loans aren’t available to just about anyone. There are certain requirements and criteria that the applicant needs to fulfill before getting approved for an FHA home loan. For instance, FHA borrowers should have a credit score not below 500 to even consider qualifying. The down payment for the loan can be as low as 3.5% of the property’s current price, but to pay anything less than 10%, they need to have a credit score of at least 580. There is no guarantee that you’ll get qualified and factors such as your debt to income ratio and recent credit history are very important. Another thing to keep in mind is that FHA home loans come with mortgage insurance, which is a form of payment that secures the guarantee made by the government. It is the third type of payment that borrowers have to make, aside from the principal amount and interest. They can pay mortgage insurance in two ways. The first method to pay mortgage insurance is through an upfront payment, which amounts to 1.75% of the loan’s value. The second method involves monthly payments, which are equal to 0.45% to 1.05% of the loan’s value. The monthly payment amount also depends on how much down payment you have made and the length of the loan. Unless you have made a down payment of 10% or above, you will calculate the monthly premium on mortgage insurance for the entire duration of the loan. If the borrower has paid more than 10% of the home’s value as a down payment, lenders will calculate their mortgage premium for 11 years.

Requirements for VA Loans

Like the FHA loan program, VA loans are also insured by the government, and they are also offered by banks, private lenders, and other conventional institutions. However, the Department of Veterans Affairs is backing the loans in this case. Compared to traditional loans and FHA loans, VA loans have a much lower down payment requirement. In most cases, an approved borrower might be able to get a VA loan without even making a down payment. Nearly 90% of all VA loans are issued without any down payment involved, making it much easier for veterans and serving members to buy and build their homes. In the case of VA loans, there is no specified or pre-determined credit score requirement that the applicant has to fulfill. The lender reviews applicants on a case-by-case basis and can decide whether or not to grant a loan based on their criteria instead of following some preset criteria that the Department of Veterans Affairs may have issued. One of the key requirements of the VA loan is that the applicant should be a military veteran or active-duty service member. Members of the National Reserve and the National Guard are also eligible to apply for a VA loan. The tenure or duration requirements of a person’s service depend on how much time they served and whether they are currently actively serving or not. Moreover, if an active-duty member was discharged for a qualified reason, the length of service requirement won’t apply to them. In some cases, the spouses, or surviving family members, of members who are prisoners of war or veterans who are missing in action might be eligible to apply for the VA loan. Veterans or serving members need to apply for a certificate of eligibility before applying for a VA loan.

FHA Loans vs. VA Loans – Similarities and Differences

When searching for different mortgage options, it is worth your time to check out both FHA and VA loans, apart from simply searching for conventional options. If you are eligible for both types of home loans, you can read up on the similarities and differences of both to better understand how they work and which one is better for you. Here are some factors we will use to weigh both FHA loans and VA loans against each other.

Eligibility

Eligibility makes up for the biggest difference between FHA loans and VA loans. In the case of VA loans, you can only apply if you are a veteran of the armed forces, active-duty serving member, surviving spouse of a veteran, or a prisoner of war. Moreover, you need to fulfill the length of service criteria, which varies on a case-to-case basis. On the other hand, there are eligibility criteria for FHA loans, and they can be availed by anyone, regardless of their profession, gender, marital status, income, etc. All you need is a Social Security Number to be able to apply for an FHA loan.

Home Type

The main similarity between FHA loans and VA loans is that you can only purchase a home that you intend to use as your primary residence and for no other purposes. For instance, you can’t use your FHA or VA loan to buy a property for rental or investment purposes, and you also can’t use the money to buy a commercial or vacation property. The availed loan has to be used in the property you have mentioned in your application, and you will be mandated to move into the home you buy within a stipulated period. Both FHA and VA loans allow you to buy a home containing one to four units. While most people think that both these loans are for first-time homeowners only, there are no rules that suggest or enforce this. However, both the loans are much more flexible and suitable for first-time buyers, and they help many people switch from paying rent on someone else’s property to paying the mortgage for their property. Even if you have a property while applying for one of these loans, you can still get approved, provided that you will reside in the new home you buy.

Minimum Credit Score

One notable difference between VA and FHA loans is the credit score requirements. FHA loans require at least 3.5% down payment if your credit score is 580 or higher. However, if your credit score is between 500 and 579, you will have to make a 10% down payment at least. Moreover, other factors come into play that determine the down payment you will be required to make. Since every situation is unique, you can apply to get a clearer idea of this. On the other hand, the VA loan program has no minimum requirement for credit score or even down payment, thus making it a much more flexible and suitable option. When it comes to the approval process for VA loans, lenders look at the broad range of information for the applicant, including their asset value, employment history, annual income, credit history, and other particulars. VA loan applicants mostly get a home without any down payment, a major difference between the two loan programs.

Maximum Loan Amount

Another point of difference between VA loans and FHA loans is the maximum loan amounts lenders can disburse to borrowers. In this regard, the loan amount limit for VA loans is similar to that of conventional mortgages. This limit is defined according to certain factors, including the number of units in the house and its location. For instance, if the home you have selected is in an area with a higher cost of living, your mortgage amount limit will also be higher. On the contrary, your loan amount limit will be lower if you find a home in an area with a lower cost of living. For VA loans, borrowers are protected by entitlement, referring to the amount paid by the Department of Veterans Affairs to the lender if the borrower defaults on their payments. Two types of entitlement apply in this scenario: basic entitlement and bonus entitlement. Basic entitlement requires the Department of Veterans Affairs to pay 25% of the principal amount of $36,000, whichever is lesser, to the lender. Usually, lenders will approve a loan that is 4x the amount of basic entitlement without requiring a down payment. Moreover, bonus entitlement is calculated according to the conforming loan limits for conventional loans in the applicant’s area. The Department of Veterans Affairs will pay 25% of the conforming loan limit to the lender in case of default. The VA entitlement isn’t an exact measure of the maximum loan amount a lender can give. The loan limit can be increased if you look for a bigger home or a home in a more expensive area.

Minimum Down Payment

Similar to the credit score requirement, the main difference between FHA and VA loans is that the former has a minimum requirement of 3.5% for applicants with a credit score between 500 and 579. On the other hand, VA loans have no minimum down payment required, and nearly 90% of all cases are approved without any down payment.

Maximum Debt-to-Income Ratio

The debt-to-income ratio weighs your monthly debt to your monthly income after taxes, and a simple division function gets you this value. For instance, if you earn $5000 every month and your debt amounts to $1000, then your debt-to-income (DTI) ratio Is 1000 / 5000 = 0.2 or 20%. The higher this percentage is, the less likely it will be for lenders to approve your loan. Lenders always review an applicant’s debt-to-income ratio with their loan application, and it helps them determine whether the applicant will be able to pay the requested loan amount easily or not. The maximum DTI ratio for an FHA loan is 43%. In some cases, lenders might approve borrowers with a DTI ratio as high as 50% but there would need to be compensating factors such as a higher down payment and a superb credit rating. There is no maximum debt-to-income ratio limit for VA loan applicants, but lenders mostly prefer 41% or lower. The lower your DTI ratio, the more likely you’ll qualify and it’s a predictor of your ability to pay off your debt timely. Although FHA loans allow you to go up to a 50% DTI ratio, it is your lender that will make the final decision and it’s rare to get an approval with such a high DTI.

Mortgage Insurance Premiums

Another key difference between FHA and VA loans is the mortgage insurance premium. When you avail of an FHA loan, you are required to pay an upfront mortgage insurance premium and a monthly premium. Moreover, if your down payment is less than 10% of the property value, you will have to pay the monthly premium for the complete duration of the loan. On the contrary, VA loans don’t have any mortgage insurance, but they also have an upfront funding fee, which ranges between 1.4% and 2.3% and is calculated according to how much down payment you have made.

Interest Rates and Closing Costs

The interest rates for VA loans are fixed and usually lower than FHA loans or even conventional loans. Moreover, the closing costs are also lower on VA loans. On the other hand, FHA loans may have fixed or adjustable interest rates.

Loan Tenure

A major similarity between VA loans and FHA loans is that they provide you with different repayment tenures. You can even apply for an FHA or VA loan with a 30-year repayment schedule per your budget and requirements. Apart from this, you can also opt for 10 or 15-year tenures.

Application Process

Lastly, VA loans and FHA loans have similar application processes, in the sense that you have to submit similar documentation and paperwork for identity and income verification. In this regard, both these loan options are similar to conventional loans. Some of the required documentation includes salary slips, income tax returns, bank statements, proof of debts, etc. This concludes our extensive and comprehensive article comparing FHA loans vs. VA loans. Both loans are guaranteed and insured by the United States government and issued by banks and conventional lenders. VA loans can only be availed by armed forces veterans or service members, while FHA loans are open to everybody. VA loans are the more preferred option in terms of ease and flexibility.

VA Loan Program

How many VA loans can you have? If this is what you are thinking, then you are in the right place. Getting a VA home loan program is an ideal option for veterans to make their dream come true and settle into beautiful homes with their families. Since these are primarily designed for veterans, you can enjoy flexible requirements and plans, compared to conventional loans. If you want another loan and are wondering whether it’s possible or not, read on to learn more.

What is a VA Home Loan Entitlement?

VA loan entitlement refers to the amount the U.S. Department of Veterans Affairs will offer on a VA home loan. This institute will also help determine how much a veteran can receive before needing a down payment. Furthermore, the VA loan entitlement is around $36,000 or 25% of your loan amount.

Full Entitlement

Eligible survivors, service members, and veterans with full VA loan entitlement don’t have any limitations on loans over $144,000. Hence, if you don’t have money for a down payment, full entitlement guarantees your lender that if you are not able to pay or default, VA will protect them from incurring a loss of up to the amount guaranteed, which is 25% of the original loan amount. Borrowers will be eligible for the full entitlement if any of these statements are true: ·         They have paid a completely paid a previous VA loan but sold their house ·         They have never used their VA loan benefit ·      They have used their VA home loan benefit, had a compromise claim or foreclosure, and repaid the department in full.

Understanding Remaining Entitlement

If you have remaining entitlement, your loan limit will be based on where you live. So, if you default on the loan, VA will pay the guaranteed amount to the lender, i.e. 25% of the loan limit. Then, you have to pay back the VA. For this, you might lose your home through foreclosure or have to return money to VA through a plan. The borrower can use their remaining entitlement to apply for another loan. You might have remaining entitlement if you meet any of the following requirements: ·          You paid your last loan in full as well as have the property. ·         You have an active current loan that you are regularly paying. ·         You have ownership of the property and refinanced your VA loan with a non-VA loan. ·         You have a foreclosure on your last loan and haven’t paid the institution in full ·     You had a short sale or compromise claim on a former VA loan and haven’t paid the department of veterans in full

Can You Have Two VA Loans Simultaneously?

Wondering how many VA loans can you have? Well, you can have two VA loans at a time for two separate primary residencies. However, there are some conditions that you need to meet to apply for the loan.

Having Two VA Loans at Once in Particular Circumstances

A veteran can face some situations that help them get another VA loan. One of the most common is that they decide to move out of their current home. Here are some other situations due in which you may need another VA home loan.

You Already Pay Off a Former VA Loan

If you paid your previous VA loan in full, you are eligible to apply for another loan. Paying back the loan shows that you are a responsible person and have the ability to pay back again if you get another loan. Therefore, the Department of Veteran Affairs will approve your loan application.

Another Veteran or Active Military Homebuyer Assumes Your VA Loan

VA loans are transferable if your lender approves the process of a loan assumption. In this case, the lender evaluates whether the other person can meet the requirements of VA loans and is eligible for the loan. If yes, a lender will give the financial responsibility to the other person to for mortgage payments. So, if your existing VA loan has been assumed by an active military or veteran homebuyer, you can get another loan.

You Decided to Buy a New Property after Defaulting on a VA Loan

Defaulting on any government-backed loan can make it challenging for you to apply for another loan for homeownership. However, it doesn’t mean that you can’t get one. You need to meet a two-year waiting period requirement and give proof that you will pay this time to get the loan. Also, some lenders don’t have a waiting period but require your assurance to pay back a loan.

PCS Orders Allow You to have Two VA Loans at The Same Time

PCS or Permanent Change of Station orders allow you to receive two VA mortgages at once. Since veterans often have to relocate due to job purposes, this forces them to leave their homes and find a new one in a new location. So, if you have to relocate under PCS orders, you can keep your current loan and apply for another VA loan. But when the market is stable, and you want to sell your old house, you can pay off your previous loan and only keep the new one.

How are Limits in Borrowed Money Affected if You Get a Second VA Loan?

Federal Housing Finance Agency (FHFA) has set the county’s conforming loan limit that decides your VA loan limit, but only when you already have a VA loan. If you want a second VA loan with no down payment, your total borrowing amount can’t exceed your county’s loan limit.

Frequently Asked Questions (FAQ)

Can I Buy Another House With a VA Loan or Have to Pay a Down Payment?

Yes, buying another home with VA home loans for an investment property or your second home is allowed. But there will be limits on entitlement, interest rates, and down payments.

Can You Have Two VA Loans in the Same Area?

No, because a veteran or active military is not entitled to have more than one VA loan in the same area or city.

Can I Use a VA Loan More Than Once?

Yes, if you get the approval of the loan under PCS orders or meet other requirements, you can easily get two loans.

How Many VA Loans Can You Have in a Lifetime?

There are no limits, and you can apply for loans throughout your life. You can have multiple VA loans simultaneously under certain conditions and eligibility criteria.

Does VA Loan require Private Mortgage Insurance (PMI)?

VA lenders don’t require PMI. However, you need to pay a VA funding fee with closing costs. This funding helps private lenders or VA mortgage lenders to keep offering the VA home loan programs to future borrowers.

Bottom Line

Now, you probably know how many VA loans you can have. While you are eligible to apply for more than one loan, it’s better to discuss your requirements with an expert. They can help you figure out how you can qualify and help you get a loan.

VA Loan to Build a House

Experienced, Proficient VA Construction Loan Experts Supporting Veterans 

Security America Mortgage is an experienced and proficient VA construction loan vendor that takes pride in helping veterans build and buy their dream homes. We thank veterans for their service and offer competitive interest rates on VA loans in Florida. VA loans in Florida are guaranteed by the Department Of Veterans Affairs and so do not require a down payment. You should choose Security America Mortgage for your VA loan because of our wide range of experience in helping many veterans to construct and purchase their dream homes. We offer a personalized service, with experts just a phone call away to take you through each step of the VA loan process. We offer a wide range of services, from VA home loans to VA construction loans, and our quality service will help you get the VA loan that’s right for you.

What Is VA Loan?

A VA loan is a mortgage loan offered by a United States Department Of Veterans Affairs program. VA loans are available to active service members, national guard members, veterans, and military spouses to help them purchase or build homes without a down payment or private mortgage insurance and competitive interest rates. VA loans can be used to purchase a home, build a home, or fund repairs and maintenance with 100% of the cost financed. VA-approved private lenders offer VA loans. To make VA loans more accessible, applicants are shown more leniency regarding their loan eligibility – regarding their credit score and credit history.

Types Of VA Loans

There are varying types of VA loans designed to cater to the individual needs of veterans and their families, whether they are looking to improve and maintain their current home, build a new home, or purchase a home.

VA Construction Loan

A VA construction loan is designed to help veterans build their own homes and was introduced to solve the limited availability of housing. VA construction loans cover 100% of the fees included in building a house, from the cost of purchasing the land to the cost of constructing the house. VA construction loan repayments do not need to be made until construction is complete.

VA Loan Vs VA Construction Loan

A VA loan covers the purchase of a home, whereas a VA construction loan allows veterans and their families to design and build their own homes. VA construction loans suit the needs of veterans living in areas with a low supply of housing. VA purchase loans are suitable for purchasing a home but do not have the funds for a down payment or a high credit score.

VA Purchase Loan

Lenders offer competitive rates on VA-backed purchase loans that can help you to buy a home. This is beneficial to poor credit scores who cannot get a purchase loan through traditional means. VA purchase loans do not require a down payment either, which helps those who do not have the means to access a conventional mortgage.

Refinancing VA Loan

If you have an existing VA-backed home loan, an interest rate reduction refinancing loan (IRRRL) can help you make your mortgage payments more manageable and more stable. Refinancing lets you replace your current loan with a new one under different terms to reduce your monthly mortgage payment. You must have lived in or currently live in the home backed by the existing VA loan to qualify for a refinancing VA loan.

Energy Efficiency VA Loan

A VA energy efficient mortgage (EEM) allows you to finance home improvements that increase your home’s energy efficiency. You can finance up to $6000 worth of energy-efficient installments in your home using a VA energy efficiency loan, and even more in some cases.

VA Loan To Build A House – What is a VA One-Time Close Construction Loan?

VA construction loans are down payment loans available to help veterans build their own homes. VA construction loans are guaranteed by the Department of Veterans Affairs and sanctioned by private lenders. VA construction loans are available to those who meet the VA loan requirements: veterans, active service members, national guard members, and military spouses (in special circumstances). VA construction loans are similar to VA home loans; only they cover both purchasing the land and constructing the home. VA construction loans are short-term loans that do not require any upfront costs, as you expect with a VA home loan. VA construction loans allow you to finance the purchase of land and the costs associated with construction. You can even roll in and finance the closing costs. A VA construction loan offers veterans the chance to qualify for better mortgage terms, and veterans will not be required to make PMI payments. Private mortgage insurance (PMI) is insurance designed to protect the mortgage lender should the borrower not make a payment and is designed for borrowers who do not have the 20% down payment for a home purchase. PMI payments are added to your existing mortgage payments, principal, interest, property tax, homeowners insurance. You do not need to make these payments with a VA construction loan. In addition to being exempt from PMI fees, veterans will be exempt from VA funding fees when they opt for a VA construction loan. VA funding fees are

How Long Does It Take To Close On A VA Construction Loan?

It can take between 30 and 60 days to close on a VA construction loan, but it can take longer (up to a year) in some cases. You will not be required to repay your VA construction loan until you have completed construction and financing is available for the closing costs.

Can You Get A VA Loan To Build A Home If You Do Not Own Land?

You can get a VA loan to build a home if you do not own land. The cost of purchasing land can be included in your loan, along with construction costs.

VA Construction Loan Guidelines And Requirements

There are specific guidelines and requirements for qualifying for a VA construction loan. To be eligible for a VA construction loan, you will need:
  • A certificate of eligibility – this can be obtained by submitting your statement of service. Your VA lender can help you with this process.
  • A low DTI ratio (40-55%) – your debt to income ratio (DTI ratio) gives lenders an idea of your financial position and how well-equipped you are to take on additional debt.
  • A 550+ FICO score – a FICO score is another type of credit score that lenders can use to understand your viability for a loan.
  • A property appraisal – you must perform an appraisal to understand the value of the home you are building.
  • Construction plans and blueprints – you will need to provide construction plans, and blueprints agreed on with a VA-approved builder.
  • You must have a minimum FICO score of 620 for all qualifying borrowers.
  • A minimum of 2 credit scores of 620-659 are required for all qualifying borrowers. If three scores are given, the lender will use the middle score. If two scores are given, the lender will use the lower score.
  • A minimum of one credit score above 660 is required for all qualifying borrowers.

What Is A Statement of Service?

A statement of service is a letter provided by your commanding officer detailing your service. The statement of service should describe your current service status and how long you served. A statement of service is required to gain a certificate of eligibility needed to get your VA loan.

VA Loan Credit Requirements

In most cases, VA lenders only take the past 12 months of your credit history into account. However, exceptions may be made if you have filed for bankruptcy or if you’ve had tax liens or collections. You will generally be required to have a credit score of above 620 to qualify for a VA loan.

VA Construction Loan Benefits

There are many benefits to choosing a VA construction loan over a conventional one.

Why Choose a VA Construction Loan Over A Conventional One?

VA construction loans have many benefits not offered by traditional construction loans, especially for first-time buyers who do not have a down payment. Unlike conventional loans, VA home loans do not have private mortgage insurance requirements. Additionally, we can offer you more competitive interest rates than a conventional construction loan. Because there are certain fees that borrowers cannot be charged, you will not be subject to closing costs with a VA construction loan. With VA construction loans, you do not have to requalify for the loan to refinance at a lower rate when you use VA streamline finance or IRRRL. Getting started on your VA loan is easy; simply contact a loan specialist on 1-855-824-6727.

0% Down Payment

Most veterans qualify for a 0% down payment on a VA construction loan. Of course, to reduce the interest on your loan, you can opt to place a downpayment on your VA construction loan.

Extremely Competitive Interest Rates

VA construction loans offer highly competitive interest rates compared to traditional construction loans. Our interest rates are extremely competitive compared with other VA construction loan lenders.

No Mortgage Insurance

You will not be subject to PMI payments when you opt for a VA loan. Private mortgage payments can increase your monthly overheads and reduce your savings potential. For a $250,000 house, you would pay around $150 per month in private mortgage insurance. With our VA construction loan, you can save more money for your rainy-day fund.

Qualification Standards

When you apply for a VA construction loan, we can offer you lower credit score qualification standards to ensure our loans are accessible to a broader range of veterans. If you cannot qualify for a traditional VA construction loan, we are here to help!

Seller Contribution To Closing Costs

When you choose a VA construction loan, you can access financing for the closing costs as part of your overall loan. At Security America, we can help you finance 100% of the costs of building your own home!

VA Construction Loan Process

The VA construction loan process can be pretty tricky – luckily, our experts at Security America are here to lend a helping hand!

Obtain Certificate Of Eligibility

Before you begin your VA construction loan process, you must first obtain a certificate of eligibility. To do this, you must first gather the necessary information to prove you are eligible for a VA loan. You may need to provide your DD214, and a statement of service from your commanding officer. Your VA loan lender can help you to apply for a certificate of eligibility, or you can apply online or via mail.

Choose VA Lender

Once you have received your certificate of eligibility, you will need to choose a VA-approved lender to handle your loan process. At Security America, we can offer you competitive interest rates and an experienced team that is happy to help you through every stage of your VA loan application process.

Find VA-Approved Builder

To begin construction on your home, you will need to enlist the services of a VA-approved builder. You can find a VA-approved builder using our VA-approved builders map. Contact a builder and let them know about your project and the dates in mind. If you already have your heart set on a builder, but they are not VA approved, don’t worry. Security America has experience helping builders gain a VA-ID, and we would be happy to help you approve the builder of your choosing. To determine if a builder you’re considering is VA-approved, you can use this link to enter their details and verify their approval. Even if a builder is VA-approved, you must check with us to see if they are approved with Security America.

Complete Property Appraisal

Before you begin construction, you must complete a property appraisal to present to your lender. Your property appraisal evaluates your construction plans in line with VA loan guidelines. For this reason, it’s best to choose an appraisal expert with extensive knowledge of VA loan guidelines.

Construction

Once we have approved your plans, you can close the loan and begin construction. Closing on your VA loan can take up to 60 days and longer in some instances. After closing, you will receive your funds, but we will grant the loan in installments in line with your construction timeline and plans.

Final Inspection

Once the construction process is complete, you will need to perform an official VA home inspection. Once your home passes the VA inspection, the loan becomes permanent. You can then make plans to move into your new home and start making your loan repayments.

Testimonials

Take a look at some of these testimonials from the valued customers we have helped to obtain loans for their new homes! ‘I closed on my dream home December 2019 with the help of Security America Mortgage. For all my veterans out there, I highly recommend Security America Mortgage and the loan officer I worked with, Edward. I’m sure the others are great as well. 5 stars all the way around, also want to shout out Nadia as well, tremendous. ‘ – Delton Edwards ‘Great company. Really work hard to make the process smooth and easy. Very knowledgeable and terrific at offering a host of options from regular mortgages to VA one-time-close construction loans. Rates are super competitive.’ – Jim Blum ‘I had such a great experience with Security America Mortgage. They listened to all of my concerns, answered my question and overall delivered a top notch customer experience. They are the only mortgage company I would ever recommend.’ – Mallory Thompson

FAQs

Here are some of the questions we get asked frequently about our VA home loan process.

What Kind of House Can I Build With a VA Construction Loan?

With a VA construction loan, you can build a home for you and your family. VA construction loans are designed to help supply housing to veterans and combat the low housing supply. Unfortunately, VA construction loans aren’t suitable for building million-dollar mansions.

What Are The Interest Rates On VA Construction Loans?

The interest rates on VA construction loans are highly competitive compared to traditional construction loans. In addition to this, you can avoid paying private mortgage insurance with a VA construction loan.

VA Construction Loan Vs. Construction Loan

VA construction loans are more accessible than traditional construction loans, as there are more lenient standards for your credit rating. In addition to this, you are not obligated to make a downpayment with a VA construction loan, which makes it easier for those without the funds for a downpayment to build their own home.

How Hard Is It To Get A VA Construction Loan?

The process of obtaining a VA construction loan is pretty tricky. Rather than take on the process by yourself, you should enlist the help of a VA loan lender to help you through the application process. At Security America, our team of experts is willing to guide you through every step of the application process.

Mortgage Payments On A VA Construction Loan

Mortgage payments on a VA construction loan have more competitive interest rates. You are not required to make repayments on your VA construction loan until the construction process is complete.

What Is A Statement Of Service?

A statement of service is a letter from your commanding officer detailing the status of your service and how long you have served. The statement of service is required to prove your eligibility for a VA loan and receive your certificate of eligibility.

Why Is My Local Bank Discouraging Me From Using A VA Loan?

Many local banks and credit unions are not approved to offer VA loans. You should check if your bank is authorized to issue VA loans. VA loans are often the best options for veterans that need a loan for 100% of the purchase price and do not possess the funds for a down payment.  

How Many VA Loans Can You Have

How Many VA Loans Can You Have? How many VA loans can you have? If this is what you are thinking, then you are in the right place. Getting a VA loan is an ideal option for veterans to make their dream come true and settle into a beautiful home with their families. Since these are primarily designed for veterans, you can enjoy flexible requirements and plans. If you want another loan and are wondering whether it’s possible or not, read this article further.

What is a VA Loan Entitlement?

VA loan entitlement refers to the amount the U.S. Department of Veterans Affairs will offer on a VA home loan. This institute will also help you determine how much a veteran can receive before needing a down payment. Furthermore, the VA loan entitlement is around $36,000 or 25% of your loan amount.

Full Entitlement

Eligible survivors, service members, and veterans with full entitlement don’t have any limitations on loans over $144,000. Hence, if you don’t have money for a down payment, full entitlement guarantees your lender that if you are not able to pay or default, they will get 25% of the loan amount. Borrowers will be eligible for the full entitlement if any of these statements are true:
  • They have paid a completely paid a previous VA loan but sold their house
  • They have never used their home loan benefit
  • They have used their home loan benefit, had a compromise claim or foreclosure, and repaid the department in full.

Understanding Remaining Entitlement

If you have remaining entitlement, your loan limit will be based on where you live. So, if you default on the loan, you have to pay the lender more than 25% of the loan limit by subtracting how much of the entitlement you have used to the date. The borrower can use their remaining entitlement to apply for another loan. You might have remaining entitlement if you meet any of the following requirements:
  • You paid your last loan in full as well as have the property.
  • You have active current loan that you are regularly paying.
  • You have ownership of the property and refinanced your VA loan with a non-VA loan.
  • You have a foreclosure on your last loan and haven’t paid the institution in full
  • You had a short sale or compromise claim on a former VA loan and haven’t paid the department of veterans in full

Can You Have Two VA Loans Simultaneously?

Wondering how many VA loans can you have? Well, you can have two VA loans at a time for two separate primary residencies. However, there are some conditions that you need to meet to apply for the loan.

Having Two VA Loans at Once in Particular Circumstances

A veteran can face some situations that help them get another VA loan. One of the most common is that they decide to move out of their current home. Here are some other situations due in which you may need another VA home loan.

You Already Pay Off a Former VA Loan

If you paid your previous VA loan in full, you are eligible to apply for another loan. Paying back the loan shows that you are a responsible person and have the ability to pay back again if you get another loan. Therefore, the Department of Veteran Affairs will approve your loan application.

Another Veteran or Active Military Homebuyer Assumes Your VA Loan

VA loans are transferable if your lender approves the process of a loan assumption. In this case, the lender evaluates whether the other person can meet the requirements of VA loans and is eligible for the loan. If yes, a lender will give the financial responsibility to the other person to pay for a mortgage. So, if your loan has been assumed by an active military or veteran homebuyer, you can get another loan.

You Decided to Buy a New Property after Defaulting on a VA Loan

Defaulting on any government-backed loan can make it challenging for you to apply for another loan for homeownership. However, it doesn’t mean that you can’t get one. You need to meet a two-year waiting period requirement and give proof that you will pay this time to get the loan. Also, some lenders don’t have a waiting period but require your assurance to pay back a loan.

PCS Orders Allow You to have Two VA Loans at The Same Time

PCS or Permanent Change of Station orders allow you to receive two VA mortgages at once. Since veterans often have to relocate due to job purposes, this forces them to leave their homes and find a new ones in a new location. So, if you have to relocate under PCS orders, you can keep your current loan and apply for another VA loan. But when the market is stable, and you want to sell your old house, you can pay off your previous loan and only keep the new one.

How are Limits in Borrowed Money Affected if You Get a Second VA Loan?

Federal Housing Finance Agency (FHFA) has set the county’s conforming loan limit that decides your VA loan limit, but only when you already have a VA loan. If you want a second VA loan with no down payment, your total borrowing amount can’t exceed your county’s loan limit.

Frequently Asked Questions (FAQ)

Can I Buy Another House With a VA Loan?

Yes, buying another home with a VA home loan for an investment property or your second home is allowed. But there will be limits on entitlement, interest rates, and down payments.

Can You Have Two VA Loans in the Same Area?

No, because a veteran or active military is not entitled to have more than one VA loan in the same area or city.

Can I Use a VA Loan More Than Once?

Yes, if you get the approval of the loan under PCS orders or meet other requirements, you can easily get two loans.

How Many VA Loans can You Have in a Lifetime?

There are no limits, and you can apply for loans throughout your life. You can have multiple VA loans simultaneously under certain conditions and eligibility criteria.

Bottom Line

Now, you probably know how many VA loans you can have. While you are eligible to apply for more than one loan, it’s better to discuss your requirements with an expert. They can help you figure out how you can qualify and help you get a loan.

Sources

https://www.veteransunited.com/valoans/second-tier-entitlement/ https://blog.movement.com/2020/11/11/va-loan-entitlement-in-regards-to-homeownership/ https://www.lendingtree.com/home/va/understanding-the-va-loan-bonus-entitlement/ https://www.military.com/money/pcs-dity-move/pcsing-with-va-loans.html

Can You Buy Land With a VA Loan

  No, you cannot use a VA jumbo loan to purchase vacant land. VA home loans are only available for buying existing homes, and the VA handbook forbids the use of VA loans to buy “unimproved land with the intent to improve it in the future”. That means you cannot use a VA loan if you are buying land but don’t plan to build a home on it right away. It must be imminent that a permanent primary residence will be established.

You cannot use a VA Loan to purchase only land

The VA loan can be used for the purchase of land, but it must be used simultaneously with the construction of a new home. VA loans cannot be used for the purchase of land without construction – even if the home will be constructed later. Veterans may have other options for land-only purchases depending on their current state.

A VA loan allows you to purchase land if a property is built on it

Buying land with a VA loan requires more consideration than a single-family home, if you’re looking to buy land to design and build your dream, Security America Mortgage will assist you throughout the difficult path. You cannot use a VA loan for the purchase of land unless you also plan strategies to immediately build a home on the property. Here, at Security America Mortgages VA loans are available to eligible veterans, who can use them to finance up to 100% of the purchase price of an eligible property, up to approved loan limits.

Let’s understand VA rules

VA loans are an important option for many Veteran homebuyers, including first-time Veteran buyers, seasoned Veteran home buyers, and all Veterans with this earned benefit.  As such, having a good understanding of the rules and regulations that govern these loans is essential for anyone looking to apply for this type of financing. It also means that lenders must adhere to specific underwriting standards when evaluating VA-approved loans. These requirements include things like a minimum property value and ensuring that your loan-to-value ratios do not exceed certain thresholds.  To be eligible for a VA loan to purchase land, you must meet all of the basic requirements of a VA loan, including having adequate income and credit history. Additionally, you must be a military service member or veteran, and the property must be for your own personal occupancy – not for investment or rental purposes. Another key aspect of VA loan rules relates to eligible borrowers. In order to qualify for this type of financing, you must either be an active service member, an honorably discharged veteran, or the spouse of a deceased veteran.  VA loans are designed for owner-occupied properties, there are occupancy requirements that must be met in order for the loan to be approved. Here are a few ways you can utilize the VA land loan program to build that dream home you’ve always dreamed of designing. We can help you build your dream home regardless of whether you’re moving, retiring, or have finished your service and are looking to use your benefits. We specialize in VA loans, so we know both the specifics of the loan type as well as the unique circumstances of veterans. We help you make sure that your credit and income qualifications will be clear before you begin down the building path. The purchase must meet certain requirements. You can use VA loans to:
  • The construction of a new home on your own land.
  • Existing property with a residence on it.
  • Constructing a new home on land you purchase simultaneously.
  • The purchase of farmland with an existing residence that you intend to live on
 

Requirements to buy land and construct the property: 

  • The property you are planning to build cannot have more than four units

When planning to build residential property, it is important to consider all of the legal restrictions that may be in place. For example, you may discover that there are limits on the number of units that can be built on a single piece of land.  
  • The property should be associated with a permanent foundation

A permanent foundation is necessary in order to obtain financing and to ensure that your home can remain standing over time. It also helps to create a stronger structural base for the building and ensures that water will drain properly away from the property.  
  • The property needs to meet the VA loan minimum property requirements

One of the first things you’ll need to do is ensure that the property you’re interested in meets the VA loan minimum property requirements. These requirements are in place to protect borrowers and help ensure that they’re getting a home that’s safe and livable.  
  • Land cannot be situated in a noise zone or near landfills, dumps, or risky material facilities

One of the most important of these is whether or not the land is situated in a noise zone or near any landfills, dumps, or other sites that handle potentially dangerous or hazardous materials. These types of properties are typically not suitable for residential development, as they pose a significant risk to public health and safety.  
  •  Land cannot be in places vulnerable to landslides, instabilities, or even earthquakes

Because land is so fundamental to human life, it needs to be in an area that is protected from the destructive forces of nature. So if you’re looking for a place to build your future home or business, keep in mind the importance of finding a safe location for your land. If the land you’re considering is in any of these risk zones, it’s best to find another property.  

How to use a VA loan to purchase land and properties?

The Department of Veterans Affairs (VA) loan program is one of the most powerful benefits available to veterans and active-duty service members. It can be used to purchase land and build a home, or it can be used to purchase an existing home. If you’re interested in using a VA loan to buy land and build on it, there are a few things you need to know. First, you’ll need to find a real estate agent who is familiar with the VA loan process and can help you find the right piece of property. Once you’ve found the perfect parcel of land, you’ll need to make sure you have a VA approved builder, your own loan approval and for property approval, you’ll get a  VA certified appraisal of the land with the property to be built plans approved with your VA lender in order to obtain financing. The final step on a traditional VA loan is to close on the loan and take ownership of your new property. With a VA loan, you can enjoy all the benefits of owning your own piece of land and home without having to worry about coming up with a large down payment. It’s just one more way that the VA is helping veterans achieve their dreams. Using your VA benefits to buy land and construct a home — one way to purchase land is through a local bank.  Get a VA loan to finance both the land and the home construction. If you own your land already or want to buy land before building that’s great and can help expedite your VA loan request to construct your home. There are generally three options if you’re looking to buy land with your VA land loans benefits:
  1. By land in advance using a local bank and then use your VA loan benefit to fund the construction of your home.
  1. Utilize a VA loan to fund both the construction and the land purchase
  1. Obtain a VA construction loan which is a short-term loan that allows you to borrow the money needed to buy land and construct your home. Once the construction of your home is finalized, you can then refinance the construction loan into a VA home loan.

 Frequently asked questions (FAQ)

Can I buy land with a VA loan? 

The answer to this question will depend on a number of factors, including the type of property you want to buy and your eligibility for a VA loan. You cannot only buy land. To use VA loan benefits, you need to purchase both land and a home inside. You cannot only buy land. To use VA loan benefits, you need to purchase both land and a home inside.

How many acres can you purchase with a VA loan?

There is no limit since you meet all VA loan requirements and have entitlement. So, if you’re looking to purchase a home with a VA loan, be sure to research the loan limits for your county and plan accordingly.

How much can you borrow if you get a VA loan to purchase land and property?

It depends on your VA-approved lender and the VA loan requirements. Nonetheless, VA loans for acquiring both land are property are not common since they are assumed as risky.

Do I need to put money down if I want to buy land and a house with a VA loan? 

No. Usually, VA loans do not require a down payment. Additionally, not everyone will be eligible for a VA loan in the first place, as you must meet certain requirements.

VA Appraisal Checklist

What is a VA Appraisal?

VA appraisal is a process that helps lenders determine a home’s value. Note that VA appraisals are different from conventional appraisals. The costs of the appraiser vary by state and appraisers have a responsibility to ensure that your property meets the Minimum Property Requirements specified by the U.S Department of Veterans Affairs. Since veterans look for homes that are safe and meet MPRs standards, VA appraisal helps to ensure this. For instance, the house must have quality roofing and damaged-free foundations. And in some cases, VA appraisal guidelines may look strict. For instance, if veterans want to purchase old properties, they need to search for well-maintained houses, making it a challenge to find their desired house.

Components of The VA Appraisal Process

The VA process includes two major steps that decide the result: inspection and valuation.

Valuation

The first objective of the VA loan appraisal is to determine a “fair market value” of your chosen property. Your VA home loan lender will finance whichever is less, the purchase price of the house or appraised value. In this step, the appraiser will analyze the recent home sales, and compare them with your chosen property. They might look at the neighborhood, the size of the property, and the features of the house.

Inspection

Inspection is the second step that is a major factor in the assessment of the home’s value. The appraiser will check the HVAC system, windows, doors, and other things. They will determine the number of rooms you have. This also includes what facilities and amenities you’ll get with the house. Additionally, they will inspect the overall condition of your property.

VA Minimum Property Requirements

VA loan program requires the house to meet minimum property requirements. These eligibility criteria have been designed to ensure that veterans and their families don’t have to experience trouble in near future. Also, the house needs to be safe and secure. You and your family’s safety and security or important.  A front door that doesn’t lock properly and a gas leak is the last thing you want to deal with after buying a home.

Here is the VA appraisal checklist that you need to know.

  • working heating, electric, and cooling systems
  • house needs to be sufficient in size to meet basic regular needs
  • quality roofing that can stand harsh weather
  • continuous and clean water supply
  • free of insects, dry rot, and fungus that can destroy wood
  • no lead basement paint
  • sanitary sewage disposal
  • clean and updated crawl and attics spaces
Your heating systems also need to meet some standards. You need a traditional backup system to reduce any risk of problems. The appraiser might look for things that are specified by your lender. They can assess the pipes, kitchen cabinet condition, basement conditions, and much more. Also, they will create a report at the end of the assessment and provide it to your lender. Then, your lender will decide whether they can give you a loan for the property or not.

How Long Will it Take? The VA Appraisal Timeline Explained

Since the VA home appraisal checklist is long, it requires around 10 days for completion. 10 days is the typical timeline for the appraiser. It can vary by the type of property and lender you choose, but the process doesn’t end here. Your lender and appraiser will take more time to evaluate the appraisal. Here are some steps that will require a few more days before you get a loan.

VA Appraisal Report is Created and Uploaded

Once the appraiser appraises your house and conducts all the property research, they will start preparing a report. This report will be brief and will include every aspect of the inspection and evaluation. It might also include the improvement and repairs your home needs. You can also find the appraised value of the house in the report. This report is designed to ensure that your chosen home meets all the VA loan requirements. It also needs to check every point of the VA appraisal checklist. Since your lender uses it to make an underwriting decision, it should have detailed information about the comparable properties and valuation.

VA Appraisal Report is Reviewed

Once the appraiser prepares the report, your lender will review it. This can take a few days, as the VA loan lender might already have several applications to check. Also, when they get the report, they check it thoroughly and compare it with their requirements. If the report shows that your desired property doesn’t meet certain requirements, the lender has to make a decision as to whether they can approve the loan amount you are asking for or if updates on the property will be required. Meeting all of the MPR standards is critical and your home loan underwriter will see these possible issues.  If a home doesn’t appraise it’s an opportunity to have the seller lower the price to the appraised value and fix any major issue. Besides, if they don’t do it for you they will lose you and anyone else needing a VA loan, VA construction loan, and possibly other home loan types as well.

The Notice of Value is Issued

The lender will issue the notice of the value. It gives a certain value that your property needs to fall in. You can use it to discuss with your seller to persuade them to reduce the sales price of your future home so that you don’t pay more than market value.  The VA loan appraisal protects you and us so that you don’t overpay! Lenders have a compliance duty to maintain the notice of value for 24 months.  Lenders must maintain copies of all loan origination records on VA guaranteed home loans. If the home appraises for more than the VA home loan limit of your city that’s ok.  Just remember that if your loan amount does exceed the loan limit then you might need to put money down. Let us calculate your current eligibility.

Clarifications, Repairs, and Negotiations

At this point, you need to try to get your loan approved. You can do this by clearing up some conditions. If you notice that your report includes information that you feel is incorrect, you can discuss it with your lender. Also, if the lender has issues with the major repairs of the property, ask the property owners to fix things before selling you the property. As a result, your desired property will meet MPR standards. Lastly, if the seller is asking for a higher price than what you can get from the loan, negotiate with them. Show them what their home is lacking and how this will affect many other buyers, not just you. Try to lower the price to the appraised market value and have any major repairs fixed.  If you need a VA renovation loan then it’s possible to build in upgrades and repairs but on a VA purchase, you cannot.

Approval

Finally, the waiting time is over. If the lender observes that your home and you are both approved to finance, they will approve your application, preapprove you, submit your file to underwriting, obtain a clear to close, and then set you up with a closing and funding date. Before signing, make sure to check all the clauses in the contract. Think about whether you agree with the loan requirements. understand how much additional cash you might have to pay the property owner. When your loan will be approved, you will be free to purchase your desired property and can start planning your life in it.

VA Loan Home Inspection Checklist

VA home loan inspection will require you to tick the following things on the checklist.

Home Infrastructure, Exterior, and Systems

These are the most important things to inspect in your house. Quality infrastructure, exterior, and systems ensure that your house is safe to live in. It shows that the property doesn’t have any life-threatening issues. Mainly the overall condition of the property will be analyzed and documented. This includes both interior and exterior of the house.  A VA appraiser can also recommend repairs needed to meet MPR guidelines.  When you are purchasing a home you’ll have an opportunity to get a home inspection that is separate from the VA appraisal.  However, a VA appraisal is a little more in-depth than a conventional home loan appraisal.  For example, a termite inspector that’s approved by the VA will do a termite inspection.  You can’t have active termites in the home you’re buying to get a VA loan.  The home’s value is based on many factors such as upgrades, quality of flooring, roof, structure, comparable homes in the area,  HVAC system, fixtures, amenities, landscaping, and so on.

Roof, Attic, and Foundations

Roofing and foundation problems can cost you a lot of money. You need to pay for labor costs, expensive supplies, and products to install. It’s hard to get this kind of money in emergencies. Therefore, VA appraisers inspect homes and prevent you from buying properties with damaged roofs and old foundations. Having a strategically designed attic is also important to ensure proper ventilation of your house and prevent roof leakages. The attic is on the checklist as well, so a damaged attic can cause problems in the HVAC system, roof, and other areas of your house.

Walls, Windows, Doors, Floors, and Interiors

The home inspection checklist will include walls, windows, floors, doors, and interiors. the appraiser will look for insects in the wooden doors and windows. They will ensure whether the floors require finishing or updating. The condition of the interior will be an important thing included in the checklist.  Broken doors, windows, moldy walls, leaking stoves, broken ACs, and leaking toilets are all issues that should be repaired. Let’s talk about a VA renovation loan if you know that you’re going to have issues like this and the seller doesn’t have money to fix the issues.

Plumbing Systems

Damaged, leaking, and old pipes can cost you a lot of money. You need a house that is free from plumbing problems so that you don’t need to invest in improvement projects. Therefore, the VA home loans checklist contains an inspection of the plumbing system.  A leak under the foundation could damage the foundation and hurt a property’s value.  You should have a separate inspector do a home and foundation inspection.

Electrical Systems

Since the property you’re purchasing will be your primary residence, it needs to include a working electrical system. Dated and damaged electronic systems are useless for you. The chances are that you might have to purchase new machinery and systems. But the loan will not be enough to purchase an electronic system along with the house itself. This is why the checklist will include electrical systems.  Electrical hazards aren’t acceptable.  Your circuit box should be functioning properly without blown fuses.

Appliances

Sure, the number of appliances you get with a house may seem impressive, but what good is it if the appliances don’t work? This is why VA land loans include the inspection of the appliances to estimate how much money you will need to replace and upgrade them.

VA Appraisal Checklist

VA appraisal checklist will include the followings that your desired house needs to have.

Heating, Electricity, and Water

These three things are crucial to comfortably living in a property. The appraiser will ensure that your chosen house has these basic things. If there are electricity and water problems, and no heating system, you might not get a loan.

Roof and Crawl Space

The roof and crawl spaces need to be in good condition, as well as your attic to protect your house from the harsh outside environment. This ensures that you and your family will not experience any problems due to the weather. Installation is needed to insulate your home so that you keep it efficient.  Craw space to the AC, safe wiring, and aspects such as no signs of rodents are important and will be looked at by your Inspector. Don’t count on a VA loan appraiser to do a full VA home inspection.  Remember they do what the VA wants them to do in a systematic way that the lender will utilize.

Utilities and Multi-Unit Homes

The appraiser will also write the type of your house. How many stories does the property have? Is it a multi-unit home or a one-story building?

Painting

Whether your property requires interior or exterior painting, it can cost hundreds of dollars. You can only avail of VA benefits if your house doesn’t require painting on walls, doors, windows, garage, and other things.

Defects and Structural Deterioration

Structural deterioration and defects may reduce your chances of getting a loan. Your appraiser will ensure that there are no structural and foundation problems that you need to fix later.

Location

Location, location location is what you always hear!  It’s for good reason.  Everyone’s desire for location is unique.  Location is a huge aspect of value.  The appraisal report will also include the location of your property. The appraiser helps lenders decide whether your house value is accurate based on the location.

The Most Common Appraisal Issues

Problems With Home Valuation

Each home is different from the others. Comparing them to determine the house value does not always give accurate results. That’s why an appraisal is detailed and covers many aspects that we’ve mentioned.  Home size, land size, location, and details mentioned above all affect the value.  Make sure your realtor does a market analysis that you agree with before making an offer. Let your VA-approved lender look at that too to see if it makes sense.  Be prepared for what you will do if the home you want doesn’t appraise.  Have some cash reserves, another purchase option, or use it as a tool to get the price to where it needs to be before starting the VA loan process.

Problems With a VA’s Minimum Property Requirements

It’s better to hire a home inspector immediately upon executing a sales contract to not waste valuable time.  Problems with MRPS can be presented to the seller in an amendment to the contract and provided to your underwriter.

Frequently Asked Questions

Who can Order the VA Appraisal?

The lender has the authority to order a VA appraisal, but the loan borrower needs to pay for the loan.

How Long Last The VA Appraisal Process?

It can take more than 10 days to complete the process.

Can I Use The Same Appraiser?

If you are planning to choose another lender like a private lender, they will have the authority to decide your appraiser.

Do VA Loans Require an Appraisal?

Yes, a VA loan requires an appraisal and the VA appraisal checklist.

What Fees Will I Have to Pay?

The Appraisal fees vary by state. So, you need to check the average fees in your location.

Bottom Line

If you want a VA home loan, you will need to go through the VA appraisal process. Your house needs to meet all the requirements of the VA appraisal checklist to help you secure the loan. If not, you might have to look for other properties that meet the criteria. If you need help understanding this process and want to know what you can do to secure the loan, you can contact highly experienced and skilled experts, Security America Mortgage. We can help you meet the criteria of the loan so you don’t miss out on an opportunity to purchase your dream house.

VA Loans Make Post-Recession Home Ownership Doable

At Security America Mortgage, we adhere to strict editorial integrity, take a look to learn more.
If you were awake and well in the U.S. in 2008, chances are, you remember the phrases “housing bubble” and “great recession” with something darker than the rose-colored glasses of nostalgia. While people who live outside the world of finance may never grasp how many fronts came together to amass that perfect storm, many of us at least know this: a bunch of people, many of whom didn’t have solid credit rates, if any at all, were taking out loans to buy houses. Interest-only loans were a thing. The Adjustable Rate Mortgage (aka ARM, aka balloon) enticed people with rates that were seductively low in the beginning, but impossibly high once the honeymoon was over. People defaulted on loans and things got bad. Examples were made, lessons learned, resulting in, for better or for worse, tighter restrictions and higher bars for those seeking to secure a home loan nowadays. Scraping together the finances and establishing the credit history to build or purchase your very own home is not a task for the faint of heart. It is also a worthwhile task you should put on your, “Let’s do this,” list. Owning a home, building your equity and your credit rate…it’s all a part of the American Dream, right? For individuals who served and sacrificed to help secure the existence of that ever-evolving and, let’s face it, sometimes elusive Dream, there are ways you can reach that home ownership (and even custom home building) goal earlier. A Veterans Affairs, or ​VA Loan​ is there—and has been since 1944—to make home ownership cost effective instead of cost prohibitive, ensuring that soldiers and their families aren’t financially penalized for a lack of credit history. If you served or have a spouse who served and are considering a home purchase, first things first: find out if you’re eligible for the loan. You may be eligible for a VA Home Loan if you meet ​one or more​ of the following conditions: ● You have served 90 consecutive days of active service during wartime ● You have served 181 days of active service during peacetime ● You have more than 6 years of service in the National Guard or Reserves ● You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability. These are some of the most commonly met eligibility requirements, but if you haven’t met these, do not consider your options exhausted. Conventional mortgage loans frequently require a 20% downpayment. If you qualify and apply for a VA Loan, your downpayment is significantly lower…somewhere in the ballpark of…oh…ZERO. Not even joking. Do the math; it’s tens of thousands of dollars, hundreds if you’re going big or if you live in an area with a higher cost of living. And the Private Mortgage Insurance (PMI) that is added to the total cost of your conventional home loan? Your VA Loan is backed by the U.S. Government, so the extra cost of PMI isn’t even a factor. Combine that with lower interest rates, and the savings is truly a game-changer. Think college funds and cars—​that​ kind of savings. Not every mortgage lender in the market is able and approved to offer the VA Home Loan or VA Construction Loan, but we’re honored at Security America to be a lender with an established and continuing tradition of providing that very service. Our VA Mortgage and Construction Loans can provide an inroad to home ownership without leaving you “house poor,” but before you step into any type of loan process, know that it is indeed just that—a ​process​. Take a look at our VA Loan Guide to learn more about ● The history of the VA Loan ● Benefits of a VA Loan ● Conventional loan rates vs. VA loan rates ● Securing a Certificate of Eligibility (COE) ● VA Loan Calculator ● VA Loan process ● All the other things Acquiring a home is a milestone move. You should always be confident in your understanding of the bold AND fine print before signing any dotted lines. Sometimes talking with an actual, living person (yes, it can happen!) is the only way to feel secure in your knowledge. ​Give Security America a call​, and remember to stay informed about ​any and all of your benefits as a veteran or the family of a veteran. “The ache for home lives in all of us, the safe place where we can go as we are and not be questioned.” ~Maya Angelou

6 Real-Estate Perks That War Veterans Have in the US

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A lot of US military veterans don’t understand the benefits that they have or simply don’t know about them. These benefits include many things, from healthcare, education, job positions, to property or real-estate perks. In this post, we are going to talk about the perks and benefits veterans have in regard to real-estate. Most benefits are provided by the US Department of Veteran Affairs, and there are different organizations that work under their regulation, in an effort to provide these benefits legally and transparently. In this post, we will present you six property-related benefits that military veterans have the right to in the US. When it comes to property loans, most of them come in the form of loans, and they are called VA loans. Here are some of them you can consider and other benefits you might not know about.

#1. Veteran Home Admission

Veteran Home Admission
Aging veterans who need a place to stay can apply for Veteran’s Homes provided by IDVA. These homes offer a comfortable environment with professional care, where veterans can spend the rest of their twilight years with other seniors. Veterans who have been in wars have admission precedence for this type of accommodation. Additionally, even veterans who haven’t served in any wars can be accepted with benefits, veteran spouses, and surviving spouses. However, it’s also important that they meet other requirements.

#2. Mortgage Assistance

If a veteran has a mortgage on their name, and they are unable to pay it, they have the right to ask for help from the Department of Veterans Affairs. It doesn’t matter if the person had the mortgage before they joined the service, or they’ve taken the loan after, they still have the right to this help. There are several ways the Department of Veterans Affairs can help, including:
  • Various loan modification programs
  • Loan forbearance
  • Special repayment plans

#3. Homeless Veterans

VA loans
All homeless veterans in the United States have the right to many kinds of different benefits, ranging from free accommodations, property loans, and construction loans. Most of these benefits are state-based, meaning that all states offer different kinds of benefits and help. They also offer various programs like residential rehabilitation programs, homeless grant programs, per diem programs, and domiciliary residential rehabilitation programs. The only things required for these benefits are proof of service and that there was no dishonorable discharge condition. In some cases, even dishonorably discharged veterans have the right to benefits.

#4. VA Property Purchase Loans

Even though VA loans are given by private lenders, they are all backed by the Department of Veterans Affairs. This is why these loans are some of the very few loan options that come with no required down payment. VA home loans also don’t have private mortgage insurance, meaning that they save the borrower hundreds of dollars each month. They also come at much better rates than conventional loans, further saving the borrower’s money. The lending policies are also more lenient, so even if you don’t qualify for conventional loans, you might be approved for VA loans. A VA loan application can be submitted online, via mail, or in-person with an authorized lender.

#5. VA Construction Loans

VA Property Purchase Loans
If a military veteran needs a loan for building a property, they can get the funding that covers all the construction expenses. These loans also require no down payment and have better rates than regular construction loans that only civilians can get. They also cover the mortgage phase of the loan. It’s important to know that not all lenders will provide VA construction loans for all types of property types. This is different with each lender, and that’s why it’s important to ask them specifically.

#6. VA Renovation Loans

VA renovation loans are limited to smaller amounts, but this means that they also come with smaller interest rates. However, the applicant will only be allowed an essential renovation of their property. Simply put, if you want to furnish your home with expensive furniture, the loan might not be approved.

Wrap Up

These are some of the many benefits that military veterans across the US have. Bear in mind that many states have added unique benefits that they offer, so make sure that you learn what additional rights you have in your state.