Florida VA Loans
Florida is the most Veteran friendly state. Just ask any of the 1.6 million Veterans that call Florida home. In 1944 the US Government established its 'Loan Guaranty Program as part of the GI Bill of Rights' and since then there have been almost 20 million closings across the nation that have benefitted Veterans.
VA Loan Highlights
- Zero down payment
- Limitations on closing costs
- Long repayment terms
- A negotiable fixed interest rate competitive with conventional mortgage interest rates
Let's first find out if you are eligible before we take a closer look at what this program can provide.
Are You Eligible For A VA Mortgage?
The Veteran's Affairs (VA) makes its Loan Guaranty program available in broad terms to
- eligible Veterans
- personnel on active duty
- surviving spouses
- members of the National Guard and Reserves
The basic for eligibility are as follows :
- For Armed Services members on active duty - VA loan eligibility is obtained after 181 days of service during peace time or with 90 days of service during a conflict.)
- Armed Services members in the National Guard or Reserves - VA loan eligibility is obtained after 6 years of continuous service, plus one of the following four traits :
- (1) Honorably discharged;
- (2) Placed on the Retired List;
- (3) Transferred to Standby Reserve or Ready Reserve after honorable service; or
- (4) Continue to serve in the Selected Reserve
- surviving spouses
- members of the National Guard and Reserves
- For surviving spouses, plus spouses of POW or MIA service persons - VA loan eligibility may be immediate for un-remarried persons. Remarried persons may not be eligible
- The VA does not offer its Loan Guaranty program to Armed Services members who have been dishonorably discharged for service.
VA Mortgage Home Loan Options
Via its 'Loan Guaranty Program;, the VA offers a purchase mortgage program whereby eligible borrowers can buy or build a single-family or multi-unit (4 units max) home, or buy a condominium or co-op.
100% financing is available and no mortgage insurance is required -- regardless of down payment size. The VA does allow seller contributions towards closing cost and pre-paids. Ask your Mortgage Broker to help assist your Realtor in correctly writing the verbiage in your purchase and sales contract.
The VA also provides a refinance program which offers both rate-and-term refinancing and cash-out mortgages.
The VA Interest Rate Reduction Refinance (IRRRL), sometimes known as VA Streamline Refinance mortgage program is among the most popular VA refinance programs for Veterans looking to reduce monthly expenses.
The VA IRRRL program is a verification-free, appraisal-less refinance with loose underwriting standards. The main qualifier for a VA Streamline Refinance is a verified reduction in monthly mortgage payment.
VA Home Loan Mortgage Rates
VA mortgage interest rates are very competitive explaining why VA closings have more than tripled during the past decade. The VA's no down payment mortgage option plus its VA Streamline Refinance has helped it to remain popular, and 2013 figures are expected to break VA loan volume records.
By getting a VA mortgage many VA homeowners are experiencing rate drops of 2% or more depending on market conditions.
What is a VA Loan?
A VA loan is one the most flexible lending tools available on the mortgage market today. Instead of issuing loans, the VA pledges to repay around a quarter of every loan it guarantees in the unlikely event the borrower defaults. This guarantee gives VA-approved lenders greater protection when lending to military borrowers and often leads to highly competitive rates and terms for qualified veterans.
VA will guarantee a maximum of 25 percent of a home loan amount limited by the maximum loan amount available in the county. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program. Limits may vary by county.
The primary benefits of a VA loan are:
- Competitive interest rates that are routinely lower than conventional rates
- Higher allowable debt-to-income ratios than for many other loans
- No mortgage insurance to pay
- No prepayment penalties
- Sellers can pay up to 6 percent of closing costs and pre - paids
- Streamlined refinancing loans that require no additional underwriting
Benefit to the lender
The key benefit to all approved mortgage lenders that issue VA loans get a guarantee from the Department of Veteran Affairs to repay approximately a quarter of every loan they guarantee in the unlikely event that a borrower defaults. This provides a VA-approved lender with a great deal of protection that they will be able to recoup their funds. Due to this guarantee VA loans are typically some of the most competitive loans regarding terms and rates for eligible veterans.
Approximately 80% of typical VA borrowers would not qualify for traditional loans.
Recipients of VA loans are not required to pay PMI (Private Mortgage Insurance) which is charged on conventional loans when less than 20% is provided as a down payment.
How much can you borrow
As with traditional loans you can (subject to acceptable credit score and income) lend up to the preset limit of $442,000 on a property. Loan limits in Sarasota county are $442,000 and are subject to change and vary from county to county across the State of Florida. This can increase in designated areas of the country as established by the federal mortgage agencies Fannie Mae and Freddie Mac guidelines.
There are 5 basic requirements to be approved for a VA loan:
- (1)The loan applicant will need to be an eligible veteran who has been issued with an entitlement.
- (2)The loan can only be issued for an eligible purpose including for purchasing a one-family residential unit, to purchase a farm residence, or to purchase a manufactured or modular home. It can also be used to refinance an existing VA guaranteed loan in order to lower the interest rate, refinanced to take out more cash, and to repair, alter or improve a home.
- (3)The veteran must either occupy or intend to occupy the property as their home within a reasonable amount of time after the loan has closed.
- (4)The applicant will need to be deemed a satisfactory credit risk.
- (5)The veteran and their spouse must have a stable income that is sufficient to meet the monthly mortgage payments. Their income should also cover the basic costs of owning a home, and allow them to pay for their other financial obligations and expenses.
NOTE: A VA loan may not always be the best option for an eligible veteran or active-duty service member with good credit and adequate cash reserves as they may be able to find better interest rates with a traditional loan
You can find more FAQ on this link. FAQ
A Guide to VA Loans
Getting Your Certificate of Eligibility
Once the VA determines you are eligible and qualified for a VA loan, the VA will issue you with a certificate of eligibility which is to be used in applying for a VA loan.
Should you need to request a certificate from the VA, you must complete VA Form 26-1880, Request For A Certificate of Eligibility For VA Home Loan Benefits and submit it to one of our VA Eligibility Centers along with acceptable proof of service as described on the instruction page of the form.
VA Loan Questions and Answers
1. What service is not eligible?
You are not eligible for VA financing based on the following:
- Active Duty for Training in the Reserves.
- Active Duty for Training in the National Guard (unless "activated" under the authority of title 10, U.S. Code).
2. Does this kind of service provide entitlement to any other veterans' home loan benefit?
Yes. World War I and Active e Duty for Training service may quality you for a HUD/FHA veterans' loan.
Under the National Housing Act loan program, the Federal Housing Administration of the Department of Housing and Urban Development administers a loan program for veterans. Financing under this program is available under slightly more favorable terms than those available to non-veterans: VA's only role in this program is to determine the eligibility of the veteran and, if qualified, issue a Certificate of Veteran Status as evidence of entitlement to HUD/FHA loan benefits for veterans.
You may get a Certificate of Veteran Status by completing VA Form 26-8261a, Request for Certificate of Veteran Status, and submitting it with the attachments listed in the instructions to any VA regional office or center for a determination of eligibility.
All veterans discharged under other than dishonorable conditions from at least 90 days of service which began before September 8, 1980, are eligible. Veterans of enlisted service in a regular component of the Armed Forces, which began a her September 7, 1980, or officers or reservists who entered on active duty after October 13, 1982, must have served at least 24 months of service or the full period for which called to active duty or Active Duty for Training before being discharged, unless the discharge was for hardship or disability.
3. What can a veteran do who has lost his or her original discharge papers and does not have a legible copy?
The veteran should obtain a Certificate in Lieu of Lost or Destroyed Discharge. Any VA Veterans Benefits Counselor at the nearest VA office will assist a veteran in obtaining necessary proof of military service.
4. Does a veteran's home loan entitlement expire?
No. Home loan entitlement is generally good until used. However, the eligibility of service personnel is only available so long as they remain on active duty. If they are discharged or released from active duty before using their entitlement, a new determination of their eligibility must be made, based on the length of service and the type of discharge received.
Note: Eligibility for members of the Selected Reserve expires September 30, 2007.
5. How much entitlement does each veteran have?
Originally, the maximum entitlement available was $2,000; however, legislation enacted since that time has provided veterans with increases in entitlement up to the present maximum of $36,000 (or up to $104,250 for certain loans over $144,000). The $36,000 may, however, be reduced if entitlement has been used before to get a VA loan. The amount of remaining entitlement can be determined by subtracting the amount of entitlement used from the current maximum available entitlement of $36,000. (See question 8 below for information on using remaining entitlement.)
6. Does VA home loan entitlement provide cash to the veteran?
No. The amount of entitlement relates only to the amount VA will guarantee the lender against loss.
7. Can a veteran get used entitlement back to use again?
If you have used all or part of your entitlement, you can get that entitlement back to purchase another home if the following conditions for "restoration" are met:
- The property has been sold and the loan has been paid in full, or
- A qualified veteran-transferee (buyer) must agree to assume the outstanding balance on the loan and agree to "substitute" his or her entitlement for the same amount of entitlement you originally used to get the loan. The buyer must also meet the occupancy and income and credit requirements of the law.
- ONE TIME ONLY if you have repaid the prior VA loan in full, but have not disposed of the property securing that loan, the entitlement you used in connection with that loan may be restored.
Restoration of entitlement is not automatic. You must apply for it by completing and returning VA Form 26-1880 to any VA regional office or center. Application forms for substitution of entitlement may he requested from the VA office that guaranteed the loan.
8. If the requirements for restoration cannot be met, is there any other way a veteran can obtain another VA loan?
Yes. Veterans who had a VA loan before may still have "remaining entitlement" to use for another VA loan. The current amount of entitlement available to each eligible veteran is $36,000 ($104,250) for certain loans over $144,000). This was much lower in years past and has been increased over time by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used $12,500 guaranty entitlement, the maximum then available. Even if that loan is not paid off, the veteran could use the $23,500 difference between the $12,500 entitlement originally used and the current maximum of $36,000 to buy another home with VA financing.
Most lenders require that a combination of the guaranty entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property, whichever is less. Thus, in the example, the veteran's $23,500 remaining entitlement would probably meet a lender's minimum guaranty requirement for a no downpayment loan to buy a property valued at, and selling for, $94,000. The veteran could also combine a down payment with the remaining entitlement for a larger loan amount.
If you have had a previous short sale, foreclosure or bankruptcy this may affect the availability of your guaranty entitlement.
9. May several veterans use their entitlement to acquire property together?
Yes. The guaranty is based on each veteran s interest in the property, but the guaranty on the loan may not exceed the lesser of 40 percent of the loan amount or $36,000 ($104,250 for certain loans over $144,000).
10. If both a husband and wife are eligible, may they acquire property jointly and so increase the amount which may be guaranteed?
They may acquire property jointly, but the amount of guaranty on the loan may not exceed the lesser of 40 percent of the loan amount or $36,000 ($104,250 for certain loans over $144,000).
11. May a veteran join with a non veteran in obtaining a VA loan?
Yes, but the guaranty is based only on the veteran's portion of the loan. The guaranty cannot cover the nonveteran's part of the loan. This does not apply to a loan to a veteran and spouse when the spouse is not a veteran. (Consult lenders to determine whether they would be willing to accept applications for joint loans of this type.)
12. Does the issuance of a certificate of eligibility guarantee approval of a VA loan?
No. The veteran must still be found to be qualified for the loan from an income and credit standpoint.
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