Frequently Asked Questions
Q: How do I apply for a VA guaranteed loan?
A: You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan.
Q: I have already obtained one VA loan. Can I get another one?
A: Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.
Q: Can anyone other than my spouse be a co-borrower on my VA loan?
Q: I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan?
A: In this case the veteran’s eligibility can be restored only if the qualified assumer is also an eligible veteran who is willing to substitute his or her available eligibility for that of the original veteran. Otherwise, the original veteran cannot have eligibility restored until the assumer has paid off the VA loan.
Q: My prior VA loan was assumed, the assumer defaulted on the loan, and VA paid a claim to the lender. VA said it wasn’t my fault and waived the debt. Now I need a new VA loan but I am told that my used eligibility can not be restored. Why?
Q: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have my used eligibility restored. Why?
A: In either case, although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.
Q: Only a portion of my eligibility is available at this time because my prior loan has not been paid in full even though I don’t own the property anymore. Can I still obtain a VA guaranteed home loan?
A: Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.
Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
A: The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit.
A: No, only an eligible veterans spouse can be a co-borrower on a VA loan
Q: Are the children of a living or deceased veteran eligible for the home loan benefit?
A: No, the children of an eligible veteran are not eligible for the home loan benefit.
Q: What are the Requirements for Loan Approval?
A: To obtain a VA loan, the law requires that:
You must be an eligible veteran who has available home loan entitlement;
The loan must be for an eligible purpose; You must occupy or intend to occupy the property as your home within a reasonable period of time after closing the loan; You must have enough income to meet the payments on the loan, cover the costs of owning a home, take care of other obligations and expenses, and still have enough income left over for family support (a spouse's income is considered in the same manner as the veteran's); and
You must have a good credit record.
Q: What is the Interest Rate for a VA loan?
A: The rate depends on market conditions. VA does not set the interest rate.
Q: Can the Interest Rate be changed?
A: Once a loan is made, the interest rate generally remains the same for the life of the loan. A veteran who owns a home obtained with a previous VA loan may apply to a lender for a new VA loan to refinance the first loan at a lower interest rate.
Q: Is a VA-Guaranteed Loan a Gift?
A: No. It must be repaid, just as you must repay any money you borrow. If you fail to make the payments you agree to make, you may lose your home through foreclosure, and you and your family would probably lose all the time and money you had invested in it. In addition, if the lender takes a loss, VA must pay the guaranty to the lender, and you will be required to repay the amount paid by VA.
Q: How Can a Veteran Get a Release From Liability From VA?
A: The veteran will be released from liability on the VA loan if your lender or VA determines that the loan is current and the purchaser of the property is able to make the payments, and assumes full liability on the loan and all the veteran's obligations regarding the loan. For loans closed prior to March 1, 1988, the application forms for a release from liability must be requested from the VA office that guaranteed the loan. For loans closed on or after March 1, 1988, the application forms must be requested from the lender to whom the payments are made.
Q: Will a Release of Liability Restore the Entitlement the Veteran Originally Used in Getting the Loan?
A: No. To have entitlement restored, the loan must either be paid in full or assumed by a qualified veteran-transferee who agrees to substitute his/her entitlement for that used originally by the selling veteran. Restoration or substitution of entitlement is not automatic. You must apply for restoration of entitlement by completing and returning VA Form 26-1880 to the VA Eligibility Center. Applications for substitution of entitlement must be requested from the VA office that guaranteed the loan.
Q: What is a VA loan funding fee?
A: The VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee is not required from veterans in receipt of service-connected compensation or surviving spouses of veterans who died in service or from service-connected causes. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. For first time use, VA funding fee is 2.15% of the purchase price. For second time use, the VA funding fee is 3.3% of the purchase price.