VA Loans

Who May Qualify for a VA Loan?

• Loan eligibility is based on the length of continuous active service, with the minimum ranging from 90 days to 24 months, depending on when the veteran served.

• Peacetime service requires longer times.

• National Guard and reservists also have eligibility based on long term service.

• A spouse of a veteran killed in action or missing in action or held as a prisoner of war is also eligible if not remarried.

• To qualify, the borrower must receive a Certificate of Eligibility (CoE) from the VA.

• Military personnel discharged dishonorably are not eligible.

Steps for Determining Your VA Loan Eligibility

• First a veteran must apply for a COE. They can do this by:

  • Applying online through eBenefits by logging into their account at https://www.ebenefits .va.gov

  • Completing a VA Form 26-188025 and submitting the completed Request for a Certificate of Eligibility form to their regional loan center (RLC) along with proof of military service.

• Acceptable proof of military service must be provided. This may include:

  • If a veteran is still serving on regular active duty, they must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of their unit or higher headquarters which identifies their social security number, and provides their date of entry on their current active duty period and the duration of any time lost.

  • If a veteran was discharged from regular active duty after January 1, 1950, a copy of DD Form 214 (Certificate of Release or Discharge from Active Duty) should be included with the VA Form 26-1880.

  • If the veteran was discharged after October 1, 1979, the veteran should furnish member copy 2, 4, 8, or any copy of DD Form 214 that includes the Character of Service (COS) and the narrative reason for separation.

  • If the veteran was honorably discharged from the Selected Reserves or the National Guard, they must include copies of adequate documentation of at least six years of honorable service.

  • Discharged members of the Army or Air National Guard may submit NGB Form 22 and NGB Form 23B with the COS document.

  • Members of the Reserves should submit their points statement with COS.

The VA Funding Fee

• While a VA loan does not require a down payment, there is a VA funding fee.

• The amount of the fee varies based on how much the borrower is putting down as well as how many units the home has and whether this is their first or subsequent home purchase. You can see the current schedule of VA funding fees depending online at the VA website by clicking here.

• The funding fee is based on the loan amount and will vary depending on the size of the optional down payment and whether the borrower is a veteran who served full-time or is a reservist or National Guard veteran.

• An honorably discharged veteran may not even have to pay the funding fee if they qualify for a VA exception relating to a service-connected disability.

• In general, if the borrower is on active duty, the funding fee cannot be waived unless certain exceptions apply.

• Spouses of military members who died during active duty service, or from service-connected disabilities, are exempt from the VA funding fee.

• Also exempt are veterans who have been rated eligible to receive compensation as the result of a pre-discharge disability examination.

Requirements For The Property

• Owner-occupied dwellings of one-to-four units qualify for VA loans.

• Other types of properties that can be purchased with a VA loan include VA- or HUD-approved condominiums, manufactured homes when attached to a permanent foundation, farm property, and new construction.

• With a new construction purchase, the builder must be registered with the VA as well as provide for specific home warranties.

• VA Loans are only available for a veteran and the veteran's spouse

The VA Appraisal Pocess

• The VA appraisal is an assessment of the property’s value and condition by an independent VA appraiser.

• VA appraisals are required for every VA purchase loan.

• The first purpose of the VA appraisal is to establish a “fair market value” for the property. A lender is going to finance whichever is less between the appraised value and the purchase price of the home. Appraisers will look at recent comparable home sales, or “comps,” to help determine the property’s value.

  • VA appraisers look for at least three homes similar in size, age and location to the one you hope to buy. It can be tough to find good comps for unique properties like log cabins, A-frames and even homes on large acreage. Lenders will usually need at least one good recent comparable home sale in order to move forward on a loan.

• The second purpose of the VA appraisal is to ensure that the home is safe, structurally sound, and free of health hazards. The VA appraiser will conduct a check based on the VA's Minimum Property Requirements and address every concern on the appraisal report. Homes must meet the Minimum Property Requirements to be approved for financing.

• Don’t mistake the appraisal for a home inspection, as a home inspection provides a much more in-depth review of the home's physical condition than the VA appraisal does.

• Things the appraiser looks for:

  • Inaccessible areas of the house such as attic or crawlspace

  • Exposed wiring

  • Outbuilding in disrepair or unsafe

  • Broken windows or windows that won’t open

  • Garage door opener not working

  • Garage door safety feature not working

  • Water stains on the ceiling

  • Rotten wood around fascia boards, doors, & garage doors

  • Loose or missing handrail on steps

  • Missing stove, HVAC, water heater, or other essentials

  • Hot water and power turned off

  • Peeling paint in or on homes built before 1978

  • Presences or termites or termite damage

  • Access to the Site: Each property must have access from a public or private street. The street must have an all-weather surface. Private streets must be protected by permanent easement and maintained by an HOA or joint maintenance agreement.

  • Access to the Unit and Rear Yard: The unit must have access without passing through another unit. Each living unit must be able to be used and maintained individually without trespass upon adjoining properties. Required easements must run with the land. Rear yard must have access without passing through any other living unit. For a row-type dwelling, the access may be by means of alley, easement, passage through the dwelling, or other acceptable means. Access for Wall Maintenance: There must be adequate space between buildings to permit maintenance of the exterior walls

  • Utilities: Utilities (water, sewer, gas, electricity) must be independent for each unit. Several units under one ownership may share utilities if there are separate shutoffs. Individual utilities must not cross another unit unless there is permanent legal right of access for repair and maintenance.

    • Well water quality tests may have to be completed.

  • Roof: The roof must prevent the entrance of moisture and have at least five years remaining useful life. All old shingles must be removed if a defective roof has three or more layers.

  • Ventilation: There must be sufficient natural ventilation in areas such as attics and crawl spaces to minimize the effects of excess heat and moisture.

  • Crawl Space: The crawl space must have adequate access, be properly vented and clear of all debris. Excessive dampness or ponding of water must be corrected. Floor joists must be high enough to allow access for maintenance and repairs of ductwork and plumbing.

  • Party Walls: A party wall constructed at the property line must extend the full height of the building (foundation to roof ridge). The wall may separate semi-detached or row units.