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VA Loans

  • VA guaranteed loans are made by private lenders such as mortgage companies to eligible veterans for the purchase of home that will be their primary residence. A veteran's VA entitlement can be used for the first home and for subsequent home purchases.
  • To get a VA loan, a veteran must apply to a lender that is able to make VA loans. If the loan is approved, the VA will guarantee a portion of it to the lender. This guarantee protects the lender and allows a veteran to obtain favorable financing terms.
  • There is no maximum VA loan but lenders will generally limit VA loans to $417,000. This is because lenders sell VA loans to the secondary market, which places a $417,000 limit on these loans.
  • For loans up to $417,000, it is usually possible for a qualified veteran to obtain no down payment financing.
  • VA loans have no mortgage insurance (PMI) or prepayment penalties.
  • VA loans are one of the few types of loans that are assumable upon lender approval of credit of potential new borrower.
  • Veterans need to have served under certain conditions that are outlined on the official VA web site:  www.homeloans.va.gov
  • VA loans having a 2.0% funding fee. This can be borrowed with the mortgage. Eligible veterans with down payment are often advised to evaluate other loan possibilities as well because the 2.0% funding fee is an inefficient way to employ some or all of the available down payment.
  • Borrowers income qualify not on the basis of debt ratio that is normally used but on the amount of "residual income" remaining after all housing expenses and other expenses are paid.
  • The VA loan process is similar to the loan process for conventional loans except for two significant differences. First, the borrower must obtain a certificate of eligibility at the beginning of the process. Here, the lender obtains the service information from the veteran, submits it online, and returns the ACE (Automated Certificate of Eligibility). The veteran will need to obtain Discharge form DD214 prior to this. Second, the appraisal must b performed by a VA-assigned appraiser. Other than that, the process is very similar to any other mortgage loan.
  • VA loans can be used to purchase multi-unit properties.
  • CalHFA has just become a good alternative to the VA. CalHFA recently waived the first time home buyer requirement for veterans. This means that most veterans can use CalHFA instead of the VA. CalHFA tends to have much better rates than VA loans.



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Mark Harmon, Realtor

CalHFA Preferred Loan Officer
USA Realty and Loans

Brokerage Main Office
3994 Carson St.
San Diego, CA 92117