VA Frequently Asked Questions

Considering a VA loan? Here are the answers to some commonly asked questions regarding VA loans.

Q: What is a VA Guaranteed Home Loan?

A: VA Guaranteed loans are specially designed to provide low cost and downpayment options for our veterans. The guaranty protects the lender against a loss if you or a later owner fail to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms with little or no downpayment.

Q: What is pre-purchase counseling and why is it helpful?

A: Pre-purchase counseling gives you information on (1) the process of buying a home, (2) the key players in the home buying process, and (3) debt management. The goal is to create a more well informed homebuyer. While VA does not require such counseling, we strongly recommend it. There is usually no charge for the housing counseling. Please do not hesitate to contact your loan officer about arranging pre-purchase counseling.

Q: Does my entitlement guarantee that I will get a home loan?

A: No, obtaining your VA entitlement does not guarantee that you will receive a home loan. All borrowers will still need to meet the set minimum credit requirements.

Q: How much is my entitlement?

A: Your basic entitlement is $36,000. For loans in excess of $144,000 to purchase or construct a home, additional entitlement up to an amount equal to 25 percent of the Freddie Mac conforming loan limit for a single family home may be available. The loan limit changes yearly.

Q: Is there a maximum loan limit?

A: We offer VA loans up to $1,000,000.

Q: How do I get a Certificate of Eligibility?

A: Your loan officer has access to a program known as ACE (automated certificate of eligibility), which can provide your Certificate of Eligibility in a matter of minutes. However, not all cases can be processed through ACE - only those for which VA has sufficient data in our records.

You can also apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880, Request For A Certificate of Eligibility, to the Winston-Salem Eligibility Center, along with proof of military service. In some cases it may be possible for VA to establish eligibility without your proof of service. However, to avoid any possible delays, it's best to provide such evidence.

Q: How do I obtain a VA Home Loan?

A: Here are the steps:

• Contact your loan officer before you begin your home search to obtain your loan pre-approval and Certificate of Eligibility (if available)
• Begin your home search
• Once you have found a home, sign a purchase contract conditioned on final approval of your VA loan
• A request will be sent for a VA approved and licensed appraiser to evaluate the property and determine a reasonable value
• Once your loan paperwork has been processed and approved, your loan officer will contact you to arrange your loan closing date
• You (and spouse) attend the loan closing where you will be given the loan terms and requirements as well as where and how to make the monthly payments and the answers to any final questions you may have. Sign the note, mortgage, and other related papers.
• Move in to your new home!
• Your loan will be sent to VA for guaranty. Your Certificate of Eligibility is annotated to reflect the use of entitlement and returned to you.

Q: What are the benefits of a VA home loan?

A: There are many benefits of a VA Home loan:

• Low or no down payment
• Buyer informed of reasonable value.
• Negotiable interest rate.
• Ability to finance the VA funding fee (plus reduced funding fees with a down payment of at least 5% and exemption for veterans receiving VA compensation).
• Closing costs are comparable with other financing types (and may be lower).
• No mortgage insurance premiums.
• An assumable mortgage.
• Right to prepay without penalty.
• For homes inspected by VA during construction, a warranty from builder and assistance from VA to obtain cooperation of builder.
• VA assistance to veteran borrowers in default due to temporary financial difficulty.

Q: Is a 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 agreed to make, you may lose your home through foreclosure.

Q: Can I get a loan for a home outside of the United States?

A: Unfortunately, the law only allows VA to guarantee loans on property in the United States, its territories, or possessions.

Q: I want to buy a house with a VA loan. Do I need to occupy the property?

A: The law requires that you certify that you intend to occupy the property as your home. This requirement is considered satisfied if you actually intend to occupy the property as your home and in fact so occupy it when the loan is closed or within a reasonable time afterward.

Q: If a veteran dies before the loan is paid off, will the VA guaranty pay off the balance of the loan?

A: No. The surviving spouse or other co-borrower must continue to make the payments. If there is no CO-borrower, the loan becomes the obligation of the veteran's estate. Mortgage life insurance is available but must be purchased from private insurance sources.