To
assist veterans, certain service personnel, and certain unmarried
surviving spouses of veterans, in obtaining credit for the purchase,
construction or improvement of homes on more liberal terms than
are generally available to non-veterans.
TYPES
OF ASSISTANCE:
Guaranteed/Insured Loans. Place Cursor Here for Definition
USES
AND USE RESTRICTIONS:
VA
may guarantee or insure home loans made to eligible applicants for
any of the following purposes: (a) buy or build a home; (b) simultaneously
purchase and improve a home; (c) repair, alter or improve a home;
(d) improve a home through installation of a solar heating and/or
cooling system, or other energy conservation improvements; (e) buy
a one-family residential unit in an approved condominium housing
project; (f) refinance a mortgage or other lien on a house owned
by the applicant; (g) refinance an existing VA loan to reduce the
interest rate (h) purchase a manufactured home to be permanently
affixed to a lot that is already owned by the applicant; (i) purchase
a manufactured home and a lot to which the home will be permanently
affixed; (j) refinance at a lower interest rate an existing VA-guaranteed
loan which is secured by a manufactured home permanently affixed
to a lot owned by the applicant; (k) refinance an existing loan
that was made for the purchase of, and that is secured by, a manufactured
home that is permanently affixed to a lot and to purchase the lot
to which the manufactured home is affixed. Restrictions on guaranteed
financing are that: (a) the borrower must own and occupy, as his
or her home, the housing unit securing the loan; (b) for refinancing
loans to reduce the interest on an existing VA loan previous occupancy
is acceptable; (c) the nature and condition of the unit must be
suitable for dwelling; (d) maximum loan amount may not exceed the
property value established by VA; (e) for cash-out refinancing loans,
except for specified situations where the loan limit may preclude
lien satisfaction the loan may be no more than 90 percent of the
property value as established by VA and the borrower must own and
occupy the property; (f) the terms of repayment must bear a proper
relationship to the applicant's present and anticipated income and
expenses; (g) the applicant must be a satisfactory credit risk;
(h) if the loan involves a permanently sited manufactured home,
then that home must be classified and taxed as real property.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: (a) Veterans who served on active
duty on or after September 16, 1940, and were discharged or released
under conditions other than dishonorable. Veterans who served any
time during World War II, the Korean Conflict, the Vietnam-era,
or the Persian Gulf War must have served on active duty 90 days
or more; veterans with peacetime service only must have served a
minimum of 181 days continuous active duty. All veterans separated
from enlisted service which began after September 7, 1980, or service
as an officer which began after October 16, 1981, must also have
served at least 24 months of continuous active duty or the full
period for which the person was called or ordered to active duty.
Veterans of such recent service may qualify with less service time
if they have a compensable service-connected disability or were
discharged after at least 181 days (90 days during Persian Gulf
War), under the authority of 10 U.S.C. 1171 or 1173; or (b) any
veteran in the above classes with less service but discharged with
a service-connected disability; (c) individuals may also be eligible
if they were released from active duty due to an involuntary reduction
in force, certain medical conditions, or in some instances, for
the convenience of the Government; (d) unmarried surviving spouses
of otherwise eligible veterans who died in service or whose deaths
were attributable to service-connected disabilities; (e) service
personnel who have served at least 181 days on continuous active
duty status (90 days until the ending date for the Persian Gulf
War has been set); (f) spouses of members of the Armed Forces serving
on active duty, who are listed as missing in action, or as prisoners
of war and who have been so listed 90 days or more; (g) members
of the Selected Reserve who are not otherwise eligible for home
loan benefits and who have completed a total of six (6) years in
the Selected Reserves, followed by an honorable discharge, placement
on the retired list, or continued service. Individuals who completed
less than 6 years may be eligible if discharged for a service connected
disability. Eligibility for Selected Reservists expires September
30, 2009. Applicants must have sufficient present and prospective
income to meet loan repayment terms and have a satisfactory credit
record.
Beneficiary
Eligibility: Veterans, service personnel,
unmarried surviving spouses of veterans.
Credentials/Documentation:
Evidence of the veteran's entitlement for loan benefits and qualification
for the loan purpose, documentation on the loan transaction and
characteristics of the property proposed to secure the loan.
Pre-application
Coordination: None. This program is excluded
from coverage under E.O. 12372.
Application
Procedure: Eligible veterans should obtain
a Certificate of Eligibility from the appropriate VA office, and
present it with the housing proposal to a private lender willing
to make the loan. Application for guaranty or insurance is made
by the lender to the VA regional office or center having jurisdiction
over the locality in which the home is located.
Award
Procedure: The VA regional office or center
will issue the lender evidence of guaranty or insurance after
requirements are met and loan proceeds are disbursed.
Deadlines:
None.
Range
of Approval/Disapproval Time: From 5 to 20
days after receipt of a loan application in VA.
Appeals:
Denial of eligibility is appealable through Board of Veterans'
Appeals. In the event of a denial, claimants are advised of appeal
rights and procedures at the time of notification.
Renewals:
None.
ASSISTANCE
CONSIDERATIONS:
Formula
and Matching Requirements: The lender is guaranteed
against loss at a rate of up to 50 percent for loans of $45,000
or less; for loans of more than $45,000 and not more than $56,250,
$22,500 is guaranteed; for loans of more than $56,250 and not more
than $144,000, the guaranty is the lesser of $36,000 or 40 percent
of the loan; for loans of more than $144,000 made for the purchase
or construction of a home, the lesser of $60,000 or 25 percent is
guaranteed. To refinance the outstanding balance of an existing
VA guaranteed home loan to a lower interest rate, the minimum guaranty
is 25 percent.
Length
and Time Phasing of Assistance: Not applicable.
POST
ASSISTANCE REQUIREMENTS:
Reports:
As a condition of continued guaranty or insurance coverage, the
holder of the loan must notify the guaranteeing or insuring VA office
of the borrower's default on installment payments or other contract
terms, and of any substantive change in the terms of the contract
or the security. Reporting time limitations are specified in VA
regulations.
Audits:
VA has the right to audit loan accounting records until expiration
of the guaranty or insurance.
Records:
Until VA ceases to be liable as the guarantor or insurer of a
loan, the lender or loan holder must maintain adequate records
on the amount and dates of payments received and disbursements
made on guaranteed or insured loans.
FINANCIAL
INFORMATION:
Account
Identification: 36-4129-0-3-704.
Obligations:
(Closed Loans Guaranteed) FY 01 $20,158,573,000; FY 02 est $29,535,181,000;
and FY 03 est $29,535,181,000.
Range
and Average of Financial Assistance:
The guaranty is 50 percent for loans of $45,000 or less; and for
loans greater than $45,000 and not more than $56,250, $22,500
is guaranteed. For loans of more than $56,250 up to $144,000,
the guaranty is $36,000 or 40 percent, whichever is less. For
loans greater than $144,000 for the purchase or construction of
a home or a condominium unit, the guaranty is $60,000 or 25 percent
is guaranteed. To refinance the outstanding balance of an existing
VA guaranteed home loan to a lower interest rate, the minimum
guaranty is 25 percent.
In fiscal year 2001, VA guaranteed $20.2 billion in loans to finance
purchase of 175,559 conventionally constructed homes and condominium
units. In fiscal year 2002, it is estimated that 250,009 loans totaling
$31.25 billion were guaranteed or insured.
REGULATIONS,
GUIDELINES, AND LITERATURE:
38 CFR 36.4300-4375 and 36.4390-36.4393; "Federal Benefits for Veterans
and Dependents," VA Pamphlet 80-00-1, $5.00, available from Superintendent
of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. The stock
number is: 051- 000-0220-2. "VA-Guaranteed Home Loans For Veterans,"
VA Pamphlet 26-4; "Pointers For the Veteran Homeowner," VA Pamphlet
26-5; "To the Homebuying Veteran," VA Pamphlet 26-6; "Lenders Handbook,
Guaranteed and Insured Loans," VA Pamphlet 26-7 (available to lenders
only).
INFORMATION
CONTACTS:
Regional
or Local Office: Loan applications are processed
completely by the Veterans Benefits Administration Regional Loan
Centers for their respective geographic area jurisdictions. Initial
contact should be made with the appropriate office listed in Appendix
IV of the Catalog under Veterans Benefits Administration.
Headquarters
Office: Department of Veterans Affairs, Washington,
DC 20420. Telephone: (202) 273-7390.
