What is a VA-Guaranteed Loan?
VA-guaranteed loans are made by private lenders, such as banks, savings and loan associations, and mortgage companies. The borrower must apply to the lender. To find a lender, the real estate broker who is already involved can assist, or visit VA on the Internet.
When the loan is approved, VA will guarantee part of it. The amount of VA's guaranty usually depends on the size of the loan. This guaranty protects the lender against loss up to the amount guaranteed by VA. The largest guaranty that VA can give is an amount equal to 25% of the Freddie Mac conforming loan limit for single-family residences. Therefore the largest guarantee for 2006 is limited to $104,250 Lenders generally limit the maximum VA loan to $417,000 which is 4 times the maximum VA guarantee. In Hawaii, Alaska, Guam and the U.S. Virgin Islands, the loan limits are 50% higher, which means that the maximum guaranty is $156,375, and the maximum loan is $625,500.
A VA-guaranteed loan offers a number of safeguards and advantages. For example, the interest rate is competitive with conventional rates with little or no down payment required. The loan can be used to:
- buy a home, a manufactured home, or a condominium
- buy a lot for a manufactured home
- build, repair or improve a home (including energy efficient improvements)
- refinance an existing loan
Who Is Eligible?
Generally, the following persons are eligible:
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Veterans who were discharged since 9/16/40, under other than dishonorable conditions.
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Military personnel on active duty who have served a minimum period.
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Certain reservists and national guard members.
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Surviving spouses of certain deceased veterans.
Note: There are certain other groups of individuals who may be eligible.
What is needed to verify eligibility?
VA issues a Certificate of Eligibility to the eligible person. The lender will need the certificate to process the loan. Certificates are issued by VA's Loan Eligibility Center in Winston-Salem, North Carolina. The Center can be reached by calling toll-free (888) 244-6711.
How can you apply?
You may apply for the Certificate of Eligibility by completing VA Form 26-1880.pdf, Determination of Loan Guarantee Entitlement and take it to the County Veterans Service Office with a copy of DD Form 214 or record of discharge.
