VA Loan FAQ: 18 Must Read Questions & Answers

Man holding a stack of papersQ. Is a VA loan available to anyone?
A. Only veterans who fulfill the VA's eligibility requirements are eligible for a VA home loan.

Q. How do I go about obtaining a certificate of eligibility for a Veterans Administration loan?

The VA Form 26-1880, Request for Certificate of Eligibility, must be completed and submitted to an eligibility center with documentation of military service in order for a veteran to acquire a Certificate of Eligibility.
Veterans may also receive the certificate by going online or via a lender who has been authorized. See certificate of eligibility

Q. Must I be a first-time home buyer to qualify for a VA mortgage?
A. The veteran's loan is open to first-time home buyers and veterans who have previously purchased a house.

Q. What is the process for obtaining a VA home loan?
A. Obtaining your certificate of eligibility is the first step toward obtaining a VA mortgage. The certificate of eligibility certifies that you qualify for a home loan.

The second step is to apply for pre-approval with a VA lender.

The Veteran's Administration uses approved lenders to provide VA mortgage financing. The lender will examine your credit report and credit score, your income, your debt obligations, and any other liabilities; as well as pay stubs and any other income and debt documentation.

After you satisfy the VA mortgage requirements, the lender will you a sales price range or, if you have a signed sales contract, the lender will proceed with the appraisal and escrow. Veterans Affairs does not make direct mortgage loans to veterans.

Q. How difficult is it to obtain a VA loan?
A. The veteran's loan is quite similar to any other type of home loan.

Q. How many times am I eligible to apply for a VA loan?
A. A veteran may acquire a VA loan an unlimited number of times. However, the veteran should repay any existing VA loans to qualify for the maximum loan amount on the new mortgage.

Q. How much do VA loan closing charges cost?
A. Closing expenses vary by state, and in certain areas, closing fees vary by county.

Q. How much does a VA loan's financing fee cost?
A. See VA funding fee

Q. How do I apply for a VA home loan?

  1. Locate and visit with a VA-approved bank or mortgage broker (see below).
  2. Provide the following information to the loan officer:
  3. You should have your eligibility certificate or DD214 with you.
  4. The lender will want all W2s for the prior two years, as well as pay stubs for the preceding four weeks.
  5. Bring your last two months' bank statements... all pages.
  6. If applicable, divorce decree and settlement documents
  7. Identification using a photograph

Q. What is the procedure for refinancing a VA loan?
A. The VA refinance process is comparable to the VA purchase process. Gather your documentation and schedule an appointment with a VA-approved mortgage provider or bank.

What are the prerequisites for obtaining a VA home loan?

To qualify for a VA loan, the following requirements must be met:

The veteran's and spouse's income, if any, must be demonstrated to be stable and sufficient to cover mortgage payments, house ownership fees, other duties and expenses, and leave enough for family support. The veteran must be a creditworthy borrower.

Within a reasonable period after the loan is finalized, the veteran must occupy or intend to occupy the property as a principal residence. The loan must be utilized for a purpose that is acceptable.

The candidate must be a qualified veteran who is eligible for a mortgage.
SOURCE - VA Loan Origination Reference Guide

Q. What are the current rates for VA loans?
A. Refer to the pricing table below.

Q. What are the advantages of obtaining a VA home loan?
A. No down payment is required for a VA home loan, and the seller may pay all permissible closing expenses and prepayment charges up to 4% of the sales price.

Q. For What Purposes Can A VA Loan Be Used?

  • to acquire a single-family home with one to four units or a condominium unit in a VA-approved property.
  • to purchase and remodel a home concurrently.
  • to construct a dwelling.
  • to improve the energy efficiency of a home by the addition of solar or
  •  heating/cooling systems,
  • insulation,
  • water heaters,
  • weather-stripping/caulking,
  • storm windows/doors, or other energy-efficient changes approved by the lender and VA.

    These features may be included in the purchase of a new house or in the refinancing of an existing property that is owned and inhabited by a military veteran.

    That loan may be extended as much as $3,000 based on expenses, or as much as $6,000 in the event that the additional mortgage repayment is offset because of the projected decrease in energy costs.

    A refinancing loan cannot exceed 90% of the assessed value plus remodeling costs. Contact a lender or the Veterans Administration for further information.

    To re-finance an existing VA mortgage in order to lower the interest rate, or to re-finance an existing mortgage up to 90% of the fair market value as determined by the VA.

    In order to purchase a prefabricated house and/or a plot of land.

SOURCE: VA underwriting manual

Q. What is a VA loan certificate of eligibility?
A. See certificate of eligibility

Q. What is a funding fee charge for a VA loan?
A. Funding fees are calculated as a percentage of the loan amount. Funding fees collected from VA loan applicants are used to support the VA home loan program. The fund is intended to compensate lenders that have foreclosed on delinquent VA loans.

Veterans and qualifying borrowers are exempt from the VA funding fee if any of the following statements are true:

  • You are qualified for VA compensation for a service-connected disability, but you are receiving retirement or active-duty pay in place of compensation, or you are receiving both retirement and active-duty pay in lieu of compensation.
  • Receiving compensation from the VA for a service-connected disability, or Disability Insurance Compensation (DIC), or
  • If you are the surviving spouse of a Veteran who died in the line of duty, sustained a service-connected disability, or was completely disabled and are receiving Dependency and Indemnity payments,
  • A service veteran serving on active duty who can demonstrate receipt of the Purple Heart prior to or on the loan closing date is eligible to apply for this loan.
  • If you are a service member who has a proposed or memorandum rating, you must notify the lender before to the loan closing date that you are entitled to pay for a pre-discharge claim.
Q. What is the maximum loan amount for a VA loan?
A. While there is no maximum borrowing restriction on a VA loan, the lender may impose one.

Q. Who is eligible for a VA home loan?
A. See Requirements for VA home financing programs

VA loan fees paid by seller

The following information regarding the VA seller assist was obtained from VA home-loans Training Guide.pdf. Presented by Cleveland Regional Loan Center:

A seller concession is anything of value that the builder or seller contributes to the transaction at no additional cost to the buyer and for which the seller is not generally expected or required to pay or give.

The seller's concessions may include, but are not limited to the following:
  • settlement of buyer's credit balances or judgments; provision for escrowed funds to permit temporary interest-rate buydowns; and payment of extra points to enable permanent interest-rate buydowns.
  • household appliances such as a television or a microwave oven
  • the buyer pays the buyer's property taxes and insurance in advance; • the buyer pays the buyer's VA financing fee in advance.

Concessions paid by the seller do not include the following:

payment of market-adjusted points or reimbursement of the buyer's closing costs

Maximum Seller Concession for a VA mortgage

For VA loan purposes, any seller concession or combination of seller concessions that exceeds 4% of the property's calculated fair market value is deemed excessive.

When evaluating if total concessions exceed the 4% ceiling, exclude customary discount points and payment of the buyer's closing expenses.
SOURCE - VA Underwriting Manual