Question: Can I get a VA
loan if I have had a bankruptcy in the last few years?
Answer: VA credit
standards state that a veteran with a bankruptcy less than 3 years ago would
generally not be considered a satisfactory credit risk unless: the veteran or
spouse has obtained items on credit since the bankruptcy and has paid the
obligations in a satisfactory manner for a continued period; and the bankruptcy
was caused by circumstances beyond the control of the borrower, which would have
to be verified. A bankruptcy discharged 3 to 5 years ago must be given some
consideration in the underwriting of the loan. A bankruptcy discharged more than
5 years ago may be disregarded. These are the minimum standards that mortgage
companies must follow when making a VA loan. In 95% of the cases, companies make
the decision to approve a loan without VA's prior approval. Keep in mind that
mortgage companies also have money at risk in giving you a VA loan, so they may
have stricter credit standards than those mandated by VA.
Question: How big of a
loan can I get? If my guaranty entitlement is $36,000, does this mean I am
limited to a $36,000 loan?
Answer: There is no
limit on the size of a VA guaranteed home loan, provided that the veteran is
qualified for the loan from a credit and income standpoint. However, as a
practical matter, companies will generally limit the maximum loan amount to 4
times the amount of the veteran's available entitlement plus any downpayment.
Currently, the maximum entitlement on loans above $144,000 is $50,750, which
will support a no downpayment loan of up to $240,000.
Question: Why do I have to
pay a fee for a VA home loan? Since I paid a fee for my first loan, why is there
a larger fee for my second loan?
Answer: The VA funding
fee is required by law. The fee, currently 2 percent on no downpayment loans, is
intended to enable the veteran who obtains a VA home loan to contribute toward
the cost of this benefit, and thereby reduce the cost to taxpayers. The funding
fee for second time users who do not make a downpayment is 3 percent. The idea
of a higher fee for second time use is based on the fact that these veterans
have already had a chance to use the benefit once, and also that prior users
have had time to accumulate equity or save money towards a downpayment. Second
time users who make a downpayment of at least 5 percent pay a reduced funding
fee of 1.5 percent, the same as first time users making the same downpayment.
For a 10 percent downpayment, the fee drops to 1.25 percent. The effect of the
funding fee on a veteran's financial situation is minimized since the fee may be
financed in the loan.
Question: May a veteran
join with a non veteran who is not his or her spouse in obtaining a VA loan?
Answer: Yes, but the
guaranty is based only on the veteran's portion of the loan. The guaranty cannot
cover the non-veteran's part of the loan. Consult mortgage companies to
determine whether they would be willing to accept applications for joint loans
of this type. Mortgage companies that are willing to make these types of loans
will likely require a downpayment to cover risk on the unguaranteed,
non-veteran's portion of the loan. Unlike other loans, the mortgage company must
submit joint loans to VA for approval before they are made. Both incomes can be
used to qualify for the loan. However, the veteran's income must be sufficient
to repay at least that portion of the loan related to the veteran's interest in
(portion of) the property and the non-veteran's income adequate to cover the
rest.
NC
Mortgage Banking License #105309
