Serve the mortgage lending needs of
borrowers who serve our country…
VA Guaranteed Home Loans
Training
Offered by…
FIRST MORTGAGE CORPORATION
November 21, 2014
Desktop Underwriter is a registered trademark of Fannie Mae. Loan Prospector is a registered trademark of Freddie Mac. This
presentation is a summary and is not complete. This information is for mortgage professionals only and should not be distributed
to or used by consumers or other third-parties. Information is accurate as of the date shown below and is subject to change
without notice. 11/21/2014
TOPICS FOR DISCUSSION

Introduction – VA History

Highlights of the Program


General Eligibility Guidelines





Borrower Eligibility
CAIVRS
Certificate of Eligibility
VA Funding Fee
Program Guidelines


7 Step Process
Interest Rate Reduction Refinance Loans
Underwriting Guidelines





Income
Assets
Debts & Obligations
Credit
Property

VA Fees & Charges

Resources, Tools, Training, Support
Understanding VA Guaranteed Home Loans
VA History
Highlights of the Program
Common VA Terms
What the VA Loan Offers
7 Step Process to a VA Loans
VA Guaranteed Home Loans
Understanding VA Guaranteed Home Loans
Veterans Administration (VA)
HISTORY

Established in 1930 to provide federal benefits to veterans and
their families, including health care, financial assistance, and burial
benefits.

In 1944, the Servicemen’s Readjustment Act (known as the “G.I.
Bill” was signed into law and provided a variety of benefit programs
to facilitate the adjustment of returning veterans to civilian life,
including federally insured home loans with no down payment.

In 1989, the Veterans Administration was renamed the Department
of Veterans Affairs.
Understanding VA Guaranteed Home Loans
Common VA Terms

Entitlement:


COE (Certificate of Eligibility):





The fee that VA charges when a veteran uses its Home Loan Guarantee Program
This fee is generally rounded to 2% to 3% depending on whether its your 1st VA loan;
disabled veterans may be exempt from this fee
CRV (Certificate of Reasonable Value):


Certificate provided by VA to evidence a Veteran’s entitlement to participate in the VA
Home Loan Guarantee Program.
A COE is the only reliable “Proof of Eligibility” for the Lender
In order to get a COE, lenders can access the ACE (Automated Certificate of Eligibility)
System on the internet to prove eligibility
Funding Fee:


Dollar amount of loan guarantee that the Veteran’s Benefit Administration (VA) provides
to each eligible veteran
The VA certifies the fair market value of the property once the home is appraised
NOV (Notice of Value):


This form is issued to the borrower in conjunction with an appraisal
Every NOV must include an estimated reasonable value of the property, estimated
economic life of the property, and list of any property related conditions and
requirements necessary for VA loan guaranty
Understanding VA Guaranteed Home Loans
What is a VA Guaranteed Loan?

VA guaranteed loans are loans made by private lenders such as banks, savings and
loans, or mortgage companies, to eligible veterans for the purchase of a home
THAT MUST BE FOR THEIR OWN PERSONAL OCCUPANCY.

A veteran applies with a lender and once approved,VA will guarantee a portion of it
to the lender. This guarantee protects lenders against loss in the event of
foreclosure, up to the amount of the guaranty, and allows a veteran favorable
financing terms.

The Veterans Benefit Act of 2004 changed the maximum guaranty amount to
25% of the Freddie Mac Conforming loan limit.
Example:
 The Freddie Mac Conforming loan limit is $417,000.
$417,000 x 25% = $104,250
 Therefore, the maximum guaranty amount is $104,250
Understanding VA Guaranteed Home Loans
6
What the VA Loan Offers


Benefits of a VA Loan:

NO DOWN PAYMENT

NO MONTHLY MORTGAGE INSURANCE PREMIUMS

NO RESERVE REQUIREMENTS – Conforming 1 unit only (Own no other real estate)

100% GIFT FUNDS ALLOWED

Ability to finance the funding fee (plus reduced funding fee depending on down
payment, and the exemptions for veterans receiving compensation)

Fully Assumable to qualified borrowers
VA does NOT do the following:



Guaranty that the property is free of defects. VA guarantees only the loan. It is the
veterans responsibility to assure that they are satisfied with the property being purchased.
The VA appraisal is not intended to be an “inspection” of the property. A veteran should seek
expert advice (a qualified residential service) as necessary BEFORE legally committing to a
purchase contract.
If you have a home built, VA cannot compel the builder to correct construction defects
although VA does have the authority to suspend a builder from further participation in the
home loan program.
VA can’t guarantee the veteran is making a good investment.
Understanding VA Guaranteed Home Loans
7 STEPS to a VA Loan
Step1 – Veteran applies for Certificate of Eligibility (COE). Processer may apply for it using the
WebLGY application (AUTOMATED PROCESS)
Step 2 – Veteran finds home and signs purchase agreement pending VA loan approval (NOT
AUTOMATED)
Step 3 – Veteran completes 1003 and presents COE (NOT AUTOMATED)
Step 4 – Processor orders Appraisal from a VA licensed appraiser who will issue the Notice of
Value (NOV) – See FMC process on ordering VA Appraisals
Step 5 – Submit loan file to UW for full loan approval. Approval issued if appraisal, credit and
income are acceptable (NOT VA AUTOMATED)
Step 6 – Upon satisfaction of all loan conditions, docs are drawn, loan closes (Follow FMC
closing process) (NOT AUTOMATED)
Step 7 – First Mortgage applies to VA for evidence of guaranty (AUTOMATED)
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
Basic Veteran Eligibility
Occupancy
CAIVRS
Certificate of Eligibility (COE)
VA Guarantee
Loan Limits
ELIGIBILITY GUIDELINES
Understanding VA Guaranteed Home Loans
Who is ELIGIBLE?
Topic

Description
Active duty Veterans or Veterans discharged other than dishonorable
condition
•
•
90 days (181 during peacetime).
No time requirement if discharged because of service-related disabilities.

Service disabled Veterans

National Guard and Reserves
•

Unmarried Surviving Spouses – widows who have not re-married
•
•

At least 6 yrs in selected reserves with Honorable Discharge
No time requirement.
Veteran must have died on active duty or from a service-connected
disability
Spouses of MIAs / POWs
•
Veteran must have been MIA or POW for at least 90 days
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
Proof of Service

Active Duty
 DD

form 214 (Member 4 copy)
www.nara.gov
 Statement

of Service
Reserve/Guard Members
 NGB
Form 22
 Retirement Points Statement

Unmarried Surviving Spouse
 Report
of Casualty DD Form 1300
 Death Certificate
Understanding VA Guaranteed Home Loans
11
Eligible Branches of Service

Army

Navy

Air Force

Marine Corps

Coast Guard
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
Eligibility Continues…

Only the spouse of a Veteran is eligible to co-borrow with the Veteran on
VA Home Loan.



Non purchasing spouse is acceptable in community property states.



See VA’s Joint Loan policy on other eligible ‘non-spouse’ co-borrower eligibility
Joint Loans are submitted to VA direct for prior approval
Provide current credit report on non-purchasing spouse
Obligations will be used against Veteran AND non-purchasing
spouse’s credit history will be analyzed
Two Veterans or VA eligible borrower’s can purchase together.

Must be submitted directly to VA for approval
Understanding VA Guaranteed Home Loans
13
Basic Occupancy Requirements
OCCUPANCY
Understanding VA Guaranteed Home Loans
14
Occupancy

Primary Residence – Veteran to certify:


Personally live in the property as his/her home, or
Intent to occupy property upon completion of loan

Veteran must occupy within 60 days after loan closing

Exceptions:




IRRRLs – previously occupied
Active duty service person on temporary status
 Spouse or Dependent Child satisfies occupancy requirement
 Spouse occupancy also satisfy requirement if due to distant employment of
veteran other than military service
Specific future event
Refer to Chapter 3.05 for more details
Understanding VA Guaranteed Home Loans
15
Credit Alert Interactive Voice Response System
CAIVRS
Understanding VA Guaranteed Home Loans
16
CAIVRS

CAIVRS (Credit Alert Interactive Voice Response System) is a HUDmaintained system to determine if the borrower has defaulted on any
federally-assisted loan.

A CAIVRS inquiry must be performed on all borrowers.

HUD offers online access for CAIVRS to current FHA lenders, and to VA
lenders with registration. https://vip.vba.va.gov (Veterans Information
Portal)

Consider any obligations appearing in CAIVRS when qualifying.

Any delinquent or default disqualifies the borrower from obtaining the
loan, unless brought current or to satisfactory status with the Federal
Agency and a clear CAIVRS is received.
Understanding VA Guaranteed Home Loans
17
Certificate of Eligibility
COE
Understanding VA Guaranteed Home Loans
18
Certificate of Eligibility (COE)
Topic
Description
Eligibility
 A COE is the veteran’s entitlement to VA home loan benefits under
the law based on military service.
 An eligible veteran must still meet credit and income standards in
order to qualify for a VA-guaranteed loan.
 A lender cannot make a VA-guaranteed loan to an ineligible
applicant under any circumstances.
What is a COE?
A Certificate of Eligibility is the ONLY reliable Proof of Eligibility
for the Lender. There are actually 3 types of COE’s:
• Regular / Full Time / Active Duty - VA Form 26-8320, COE for Loan
Guaranty Benefits, or
• Reservist / National Guard – VA Form 26-8320a, COE for Loan
Guaranty Benefits (Reserves/National Guard)
• Annotated for Unmarried Surviving Spouse
What does the
COE show?
It shows the amount of available entitlement which is found at
the center of the COE.
Understanding VA Guaranteed Home Loans
Certificate of Eligibility (COE)
Topic
Description
Basic
Entitlement
Maximum amount that can be shown on the COE is $36,000
Bonus
Entitlement

Exception for higher entitlement is available for certain loans
greater than $144,000

May be reduced due to an active loan or prior VA loan termination
 Is only applied to guaranty on loans over $144,000
 Varies by county based on median home price
 Subject to annual changes based on changes to median home
prices
 Can be used even if veteran has $0 in basic entitlement (provided
loan is over $144,000)
Understanding VA Guaranteed Home Loans
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
FYI – Ordering an Electronic COE
Topic
Description
Who orders the COE?
The Veteran provides the COE.
How can you
get the COE?
 If the Veteran does not have his/her COE, you can order it
through ACE (Automated Certificate of Eligibility) which can
be found at http://vip.vba.va.gov
 Scroll down the left-hand side of the page until you see
‘Application’ and ‘WebLGY’. Click this and choose ‘Eligibility’
from the main menu.
 Chose Automated Certificate of Eligibility
 Follow Instructions
 Input Veterans name as it appears on DD214 (discharge
papers)
Understanding VA Guaranteed Home Loans
22
FYI – Ordering an Electronic COE
Cont’d…
Understanding VA Guaranteed Home Loans
23
FYI – Ordering an Electronic COE
Topic
Description
ACE will
not process:
•
Persons whose service was or is in the Reserves/National
Guard
•
Persons who may have had prior VA loan(s) that went into
foreclosure
•
Persons who did not serve the minimum required length of
service and were not discharged for an authorized exception
•
Persons who were discharged under conditions other than
honorable
•
Persons seeking restoration of previously used entitlement
•
Unmarried surviving spouse
Understanding VA Guaranteed Home Loans
24
COE continues…

A COE does not expire. It can be re-used again and again if it’s properly
restored

If a Veteran holds a valid COE, you can assume he/she has the
appropriate length and character of service. Sometimes, the COE is
annotated for individuals currently serving in active duty

It is possible for the COE to show an amount that is less than $36,000.

Refer to the VA Lender Handbook Chapter 2 on How to apply for a COE
and more details on this issue.
Understanding VA Guaranteed Home Loans
25
Restorations of Entitlement

Full Restoration requires


Payoff
Transfer of Title

Must apply for a new COE

One-Time Restoration (Still
owns home)

Provide documentation
VA Entitlement Codes
01
02
04
05
06
07
08
09
10
11
World War 2
Korean War
Viet Nam
Entitlement Restored
Un-remarried Surviving Spouse
Spouse of POW / MIA
Post World War 2
Post Viet Nam
Persian Gulf War
Selected Reserves
Understanding VA Guaranteed Home Loans
26
VA GUARANTEE
Understanding VA Guaranteed Home Loans
27
Maximum Guaranty

The VA guarantee is the amount VA may pay a lender in the event of
loss due to a Foreclosure

The VA guaranty or a combination of the VA guaranty plus the
borrower’s down payment and/or equity, must be equal to at least 25%
of the subject property’s estimated reasonable value as documented in
the Notice of Value (NOV)

The maximum guaranty on a VA loan is the lesser of the veteran’s
available entitlement or the maximum potential guaranty amount
indicated

The percentage and amount of guaranty is based on the loan amount
including the funding fee portion when the fee is paid from loan
proceeds.
Understanding VA Guaranteed Home Loans
28
Maximum Guaranty
Maximum Potential Guaranty
Loan Amount
(Assumes Veteran has FULL entitlement)
Up to $45,000
50% of the loan amount
$45,001 to $56,250
$22,500
$56,251 to $144,000
40% of the loan amount, with a maximum of $36,000
$144,001 to $417,000
25% of the loan amount
Greater than $417,000
The lesser of:
• 25% of the VA County loan limit, or
• 25% of the loan amount
Understanding VA Guaranteed Home Loans
29
VA Guaranty
Samples Calculations…
Example 1:

Veteran has full entitlement available and is purchasing a home for $300,000 where
the county loan limit is $417,000.




$417,000 x 25% = $104,250 Maximum Guaranty and Available Entitlement
$300,000 x 25% = $75,000 Guaranty and Down Payment Combination Required
Since VA’s guaranty is limited to the lesser of 25% of the county loan limit or 25% of the
loan amount, VA will guaranty $75,000 on Veteran’s $300,000 loan in this county.
A down payment should not be required.
Example 2:

Veteran has used $48,000 of entitlement on a prior loan, which may not be restored,
and is purchasing a home for $320,000 where the county loan limit is $625,000.





$625,000 x 25% = $156,250 Maximum Guaranty and Available Entitlement
$156,250 - $48,000 = $108,250 Entitlement Available
$108,250 x 4 = $433,000 Maximum Loan Amount with 25% Guaranty
Since the proposed loan amount will be less than $433,000, the lender will receive
25% VA Guaranty on the loan of $320,000.
A down payment should not be required.
Understanding VA Guaranteed Home Loans
30
VA Guaranty
Samples Calculations…
Example 3:

Veteran has used $104,250 of entitlement on a prior loan, which may not be restored and
is purchasing a home for $380,000, where the county loan limit is $815,000.





$815,000 x 25% = $203,750 Maximum Guaranty
$203,750 - $104,250 = $99,500 Entitlement Available
$99,500 x 4 = $398,000 Maximum Loan Amount with 25% Guaranty
Since the proposed loan amount will be less than $398,000, the lender will receive 25%
VA Guaranty on the loan of $380,000.
A down payment should not be required.
Example 4:

Veteran has full entitlement available and is purchasing a home for $800,000 where the
county loan limit is $729,750.

$729,750 x 25% = $182,437.50 Maximum Guaranty and Available Entitlement
$182,437.50 / $800,000 = 22.81% Guaranty
$800,000 x 25% = $200,000 Guaranty and Down Payment Combination Required
$200,000 - $182,437.50 = $17,562.50 Down Payment

A down payment of $17,562.50 is required.



Understanding VA Guaranteed Home Loans
31
VA 2014 Loan Limits
LOAN LIMITS
Understanding VA Guaranteed Home Loans
32
VA 2014 Loan Limits

Loan limits: VA has no specified dollar amount(s) for the “maximum loan”.
It depends on:
 The NOV – reasonable value of the property, AND
 Lenders needs in terms of Secondary Market requirements

The maximum guaranty amount (available for loans over $144,000) is
25% percent of the 2014 VA Limit shown.

A veteran with full entitlement available may borrow up to the limit shown
and VA will guarantee 25 percent of the loan amount.

If a veteran has previously used entitlement that has not been restored, the
maximum guaranty amount available to that veteran is reduced accordingly.
Understanding VA Guaranteed Home Loans
33
VA County Loan Limits

Published on VA website:
http://www.benefits.va.gov/homeloans/purchaseco_loan_limits.asp

Based on a guaranty of 25%

Loans may exceed this amount, however may require a down
payment to meet investor requirements

May need to adjust loan limit based on un-restored entitlement
Understanding VA Guaranteed Home Loans
34
Basic Program Guidelines
Interest Rate Reduction Refinance Loans (IRRRLs)
PROGRAM GUIDELINES
Understanding VA Guaranteed Home Loans
35
Program Guidelines
Topic
Description
Eligible
Product Types
•
•
Eligible
Properties
 Loan amounts up to $417,000
 SFRs
 PUDs
 VA Approved Condos
 2-4 units
 Manufactured Homes to 100% LTV/CLTV with 660 fico
(Program 07 only)
30 Year Fixed Mortgage – Conforming & Jumbo
15 Year Fixed Mortgage (Program FG only) – Conforming
 Loan amounts > $417,000
 SFRs
 PUDs
 VA Approved Condos
Eligible
Transactions
 Purchase
 IRRRL (Program 07 only)
 Cash out refinances up to 90% Max LTV (80% for Jumbo)
 VA does not have a R&T refinance program other than the VA
IRRRL; all other refinance loans are designated as cash-out
Understanding VA Guaranteed Home Loans
Basic Program Guidelines
Topic
Description
Cash Out
Refinance
•
Max 90% LTV of the VA reasonable value (no seasoning), PLUS
•
VA Funding Fee, PLUS
•
Cost of any energy efficiency improvements up to $6,000
• Cash Out may be used to pay off existing liens on the property,
allowable fees, charges, and discount points
• Cash Out to the borrower only under the following circumstances
• Cash Out Refinance loan
• Refund of items that the borrower paid cash for and were subsequently
included in the loan amount
Occupancy
Owner Occupied only except:
 IRRRL’s (Interest Rate Reduction Refinance Loans) NOO or 2nd Home
allowed if veteran can attest that he/she once occupied property as
primary residence
 Occupancy by Veteran’s spouse in the case when a Veteran is
stationed elsewhere satisfies the occupancy requirement
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
37
Basic Program Guidelines
Topic
Description
Down Payment
No down payment is required by VA since VA loans can be for the full
reasonable value of the property, unless:

The purchase price exceeds the reasonable value of the property, or

Down Payments is required per investor requirements.
 Eg., when veteran has less than full entitlement available in which
case a down payment may be required

Down payment cannot be gifted

2nd Mortgages may not be used for down payment
 “Rule of Thump” for GNMA: The VA guaranty or a combination of VA
guaranty plus down payment and/or equity must cover at least 25%
of the loan.
Secondary
Financing
•
•
•
•
•
Allowed and must be simultaneously with the 1 st Mortgage
Must submit documentation as to source, amount, repayment terms
Veteran must qualify for the 2nd as additional recurring monthly obligation
Cannot be used towards DP required by VA; OK for excess down
payment
Can be used to pay closing costs
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
38
Maximum Loan Amount
Topic
Description
Purchase
 100% up to $417,000 (Including Funding Fee) Conforming
 FMC overlay for Jumbo VA loans in High Cost Areas:
 100% up to $650,000
 75% for greater than $650,000 up to County Limit
Cash Out
 Cash out refinance is 90% of the appraised value (base amount)
PLUS the VA Funding Fee, PLUS cost of the energy efficient
improvements up to $6,000
 Jumbo VA caps at 80% LTV for cash out
IRRRL
 See IRRRL sheet
 See next slide for more details
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
Processing an IRRRL
IRRRL loan limits
VA IRRRL
Understanding VA Guaranteed Home Loans
40
Interest Rate Reduction
Refinance Loans (IRRRL’s)

IRRRL is a VA loan to refinance an existing VA loan at a lower interest
rate and monthly payments with streamlined documentation

Loan Limit Maximum: $417,000

Interest Rate: Interest Rate and PITI must be lower than rate on current VA
loan (unless previous loan is an ARM)

Term: Lesser of 30 years, or original VA term 10 years

Payment: The P&I must be less than the P&I on the current loan, unless
the IRRRL is refinancing an ARM, or the term of the IRRRL is shorter than
the term of the current loan, or Energy Efficient Improvements are included
in the IRRRL

If the PITI increases by more than 20%, the Veteran must credit qualify
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
41
VA IRRRL
FMC VA IRRRL Highlights (07 Program only):

NO Credit Report required

NO Fico Score required

12-Month Mortgage Rating on Subject Property Only

No Appraisal / No AVM

VA loan must be current

No Mortgage lates in last 12 months

Finance up to 2 discount points

No Cash Back to borrower

Refer to Chapter 6 for change in obligors – depends on Veteran on
loan
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
42
Basic Program Guidelines
Maximum Loan Amount =

The amount of the existing VA loan balance, PLUS

Allowable fees and closing costs, PLUS

VA funding fee, PLUS

Up to 2 discount points, PLUS

Cost of any energy efficient improvements up to $6,000
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
43
Basic Program Guidelines

Initial Computation

Preliminary Loan Amount
 Provides initial
computation of fees and
charges

Final Computation
 Adjusts for discount and
funding fee
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
44
Order a VA IRRRL Case
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
45
VA IRRRL vs Cash Out
Feature
IRRRL
Cash-Out Refinance
Purpose
Refinance an existing VA loan to a lower interest rate
Pay off lien(s) of any type – can also provide cash to
the borrower
Rate & Payment
Must be lower than existing VA loan
No requirement – any negotiated rate
Maximum Loan
Existing VA balance, plus allowable fees & charges, plus up
to 2% discount points, plus cost of any energy efficiency
improvements, plus VA funding fee
90% of reasonable value of property on NOV, plus
cost of energy efficiency improvements, plus VA
funding fee
Discount Points
Reasonable points can be paid – only 2% can be financed
in loan amount
No Reasonable points can be paid – if paid from loan
proceeds
Maximum Guaranty
Guaranty is at least 25% in all cases
Maximum guaranty same as for purchases
Entitlement
Veteran re-uses entitlement used on the existing VA loan –
IRRRL doesn’t impact amount the veteran has in use
Must have sufficient available entitlement – can be
restored if loan is for same property
Fees & Charges
All allowable fees & charges including up to 2% discount
points, may be included in loan
Allowable fees & charges & points may be paid from
loan proceeds
Cash to borrower
Not permitted
Cash to borrower allowed for any purpose
Refinance other lien
Cannot refinance other liens, only existing VA
Can refinance any type of lien(s)
Maximum Term
Existing VA loan term + 10 yrs not to exceed 30 years + 32
days
30 years + 32 days
Appraisal
No appraisal required (FMC requires drive-by on non
FMC to FMC loans)
Appraisal is required
Credit Underwriting
Not required except in certain cases
Full credit information & underwriting required
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
46
Underwriting Methods
General Underwriting Guidelines
Credit UW Standards (Income, Assets, Debts & Obligations)
Property Guidelines
UNDERWRITING GUIDELINES
Understanding VA Guaranteed Home Loans
47
Underwriting Philosophy

Two Basic Underwriting Questions…
1.
Can the applicant pay?
2.
Will the applicant pay?

Uses flexibility and sound judgment

Make sense, case by case basis – not an exact science

FMC Overlays
Understanding VA Guaranteed Home Loans
48
Underwriting Methods
UW follows standard VA guidelines and regulations
Refer to VA Handbook – Chapter 4
(DU Automated Underwriting Engine incorporates VA’s credit standards)
Underwriting Method
Eligible
Acceptable AUS Result
Manual (Program 07 only)
Yes
N/A
Desktop Underwriter® (DU®)
Yes
Approve/Eligible
Understanding VA Guaranteed Home Loans
Underwriting Methods
 A finding of “Approve/Eligible” can reduce the amount of
documentation requirements, and underwriting time of a loan file
 Garbage In = Garbage Out
 Data Integrity
 Follow Feedback Certification
 Downgrade to a Refer when necessary
 Risk Calculator
 Reduced Documentation
 Refer does NOT equal denial
 Absence of the above findings does not provide a basis for denying
a loan application. Manual UW is permitted on Program 07 only.
Understanding VA Guaranteed Home Loans
UW:
General Guidelines
Topic
Description
Co-Borrowers
 Allowed only if co-borrower is a veteran
 Must consider all income and debt
 Non-married borrowers or 2 veterans / active service
personnel borrowers must be UW by VA as a prior
approval
Non-Borrowing Spouse
 Acceptable on Purchases only. Community Prop State
rules:
 Credit report ordered AND consider credit history
in analysis
 Debts are counted in ratio calculation
Non Occupant Co-Borrower
 Allowed
Co-Signers
 Permitted (Program 07 only)
Resident Alien & Non
Permanent Resident Alien
 Allowed as long as primary occupying applicant is a
Veteran
Understanding VA Guaranteed Home Loans
UW:
General Guidelines
Topic
Description
Funds to
Close
 Gift from relative: provide acceptable gift letter to evidence
withdrawal from donor and transfer to borrower
 If given by seller, realtor, builder, must be considered in 4%
contribution calculation
 Not allowed from non-profit agencies
 Funds from Seller Contribution
 Borrowers own funds
 On jumbo loan amounts where veteran has to come in with
down payment on a purchase, it cannot be gifted funds
Borrower
Contribution
No Minimum Required
Reserves
•
NO RESERVES for loan amounts up to $417,000
•
6 Months PITI for loan amounts exceeding conforming limit
Understanding VA Guaranteed Home Loans
UW:
Seller Concessions
Topic
Description
 Up to 4% Limit - Lesser of sales price or appraised value and
Seller
above any discount points paid by seller.
Contribution
 Do not include:
 Payment of the buyer’s closing costs
 Payment of discount points applicable to the market
 Include:
 Payment of the VA funding Fee
 Prepayment of property taxes and insurance
 Buy-down funds – temporary or extra point for permanent
buy-down
 Payoff credit balances or judgments on behalf of the
borrower
 Gifts such as TV, Lawnmower, Microwave, etc.
Understanding VA Guaranteed Home Loans
UW:
General Guidelines
Topic
Description
Repairs
 Repairs required by VA generally performed by seller or veteran
 Not required for minor or cosmetic defects or normal wear &
tear
# of VA loans
 Limited only by amount of available entitlement (New loan O/O)
Temporary Buydowns
Allowed on 30 Year Fixed product only
Survey
Requirements
 Required on all property types except condominiums
 In areas where surveys are not customary, the title insurance
policy must insure over matters of survey
Termite inspection
Required for all properties located in areas prone to termite
infestation
Escrow Waivers
Not allowed – all VA loans must have Impounds.
Assumable
Yes
Prepayments
NONE
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW:
Income

Stable, Reliable & Anticipated to Continue

2 Year History – Consider:





Type
Training/Education/Special Qualifications
Past history
Explain gaps
Less than 12 month history:



Generally not considered stable and reliable
Carefully consider special circumstances, employers probability of
continued employment
Explain why you are using
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW INCOME:
Verification

VOE – VA Form 26-8497

Employment Verification Services

Alternative Documentation:



Verbal Verification
Pay stubs for most recent 30 days
W-2’s for previous 2 years
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW INCOME:
Non-Military Employment
Topic
Description
Wages
•
•
•
Regular, predictable and likely to continue
Verified for at least 2 years
Less than 2 years considered on a case by case basis
at UW discretion
Overtime Income
& 2nd Job Income
•
•
•
Regular, predictable and likely to continue
Verified for at least 2 years
Less than 2 years; use to offset debts (10-24 months)
Seasonal jobs &
Unemployment
•
May be averaged 24 month history for both, if it is
considered “normal” for the field the borrower is in
Alimony/Child
Support
•
Must be verified and stable
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW:
Non-Military Employment
Topic
Description
Commission
Income
•
•
•
•
•
•
Self Employed
Borrowers
•
•
•
•
•
2 year history
YTD payments
Basis of Payment – eg., Salary plus commission, straight
commission, draws against commission, etc.
When paid – monthly, quarterly, semiannually, annually
1040’s required (watch for 2106 expenses)
Less than 2 years not eligible unless previous related
employment or extensive specialized training
25% or greater ownership interest in a business
2 year history
Income Tax Returns plus all applicable schedules
YTD Profit and Loss
Balance Sheet
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW INCOME:
Active Duty Income
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW INCOME:
Active Duty Income

Active Military income – consider base pay as stable & reliable unless
applicant is within 12 months of release of active duty.

Leave and Earnings Statement is required (LES) instead of a VOE and
must be no more than (120 days old -180 for new construction) 90 days
for FMC. If re-enlisting, letter from commanding officer & the veteran
stating may/will reenlist.

Military quarters allowance and Basic Allowance Subsistence (BAS) can
be considered income. Both non-taxable.

Other Military allowances – obtain verification of type and amount and
length of receipt.

Income from Reserves or National Guard can be considered if the length
of total service indicates a strong probability of continuance.
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
60
UW INCOME:
Rental Income
Topic
Description
Rental
Income
Program 07 has no equity requirement on departing residence
Multi-Unit Property (Security Loan)
• Veteran must occupy one of the units
• 6 months PITI required
• Must have prior experience managing properties & rental experience
• May use 75% as effective income
Other Investment Properties owned by Borrower
• 3 Months PITI reserves required
• Obtain 2 years individual tax returns documenting rental income
• Must be verified as stable and reliable
Previous Owner Occupied Property – Departing Residence
• Provide lease
• Minus 75% vacancy factor
• May be used to offset mortgage payment (of the other property) if qualify
• Cannot be used as income
• NO reserves required
Understanding VA Guaranteed Home Loans
UW INCOME:
Other Income
Topic
Description
Non Taxable
Income
•
•
•
Allowed
Includes Disability, Public Assistance, Military Allowances, etc.
Does not apply to residual income
Retirement
Income
•
•
Allowed
Only non-taxable income may be grossed up for ratio
Projected Income
•
Generally not acceptable. Exceptions on a case by case at UW
discretion. Eg.,
 Bonuses, Performance raises, etc. to begin within 60 days
of closing and verified by employer
 New jobs with non-revocable contract if borrower can
support PITI & other obligations during the interim period
Other Income
•
Other Income, Pension, Retirement, Disability, MCC, etc. must
be verified. Document per AUS
Not allowed
•
•
VA Educational allowances
Unemployment compensation unless part applicant’s income due
to nature of his/her employment (eg., seasonal work)
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW INCOME:
Income Tax Calculator

Determine the appropriate deductions for Federal income tax and
Social Security/Medicare by using “Employer’s Tax Guide” charts.

Determine the appropriate deductions for state and local taxes.
Social Security/Medicare is 7.65% of gross monthly income;
OR

Log on to www.paycheckcity.com and select “Personal
Calculators”, then “Paycheck Calculator” to determine all types of
taxes.
Understanding VA Guaranteed Home Loans
63
UW ASSETS:
Assets

Sufficient in amount

Verification of Deposit (26-8497a)

Alt docs: Last 2 months Bank Statements

Large Deposits

Gift Letters

Reserves not required, however, helpful when determining
overall credit analysis
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW:
Debts and Obligation
Consider:

Alimony / Child Support – Must verify

Childcare

Allotments or Loan Pay advances (primarily seen on LES/Pay stubs of in-service
veterans)

Any debt with significant payments

Installment debts with less than 10 months remaining do not necessarily need to be
included in credit qualifying. Large payments should be considered. Do not omit these
debts in the AUS system.
Disregard:

Student loans deferred 12+ months. Student loans scheduled to begin within 12
months of the Note Date will be counted.

401k loans - Loans secured by deposited funds (do not include in assets)

Insignificant debts < 10 months

Co-obligor on another’s loan if:



Evidence payments made by someone else
No reason to believe the borrower will need to make payments in the future
Always “populate” liabilities in AUS.
Understanding VA Guaranteed Home Loans
65
UW CREDIT:
Fico Scores
Topic
Description
Minimum Fico
Scores
 Program …07
 NO minimum Fico required
 Program …FG
 Minimum 620
Alternative
Credit
 Allowed with Program 07 only
 Use non-traditional
*** FOLLOW FMC OVERLAYS AS APPLICABLE ***
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW: CREDIT
Bankruptcy
Topic
Description
Bankruptcy
(Chapter 7)
 Discharged over 24 month – disregard
o Reason must be documented and not likely to reoccur.
 Discharged over 12 months – 24 months
o Credit has been re-established for that period of time
o Was caused by circumstances beyond borrower’s
control and
o Evidence the applicants have demonstrated their
ability to handle their credit affairs
Bankruptcy
(Chapter 13)




Acceptable with 12 month payment history
Borrower’s effort to repay
1 Year seasoning with satisfactory payment performance
Approval of trustee or agency - Permission from court to
enter into new obligation
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW CREDIT:
Foreclosures / Short Sales
Topic
Description
Foreclosure /  Treat same as Chapter 7 BK.
Short Sale
 Develop facts / circumstances
 Re-established credit since
 If it was a VA loan, check if any amount of
entitlement was forfeited
 Ensure no debt to government
 Entitlement restoration
 Includes Deed in Lieu of Foreclosure and Short
Sales
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW CREDIT:
Reestablished Credit/Collections
Topic
Description
Reestablished
Credit
(Not involving a
Bankruptcy)
 Satisfactory reestablished credit required for 12 months
after date of last derogatory item was satisfied.
Collection
 Payoff is not required for approval
 Eg., Assume borrower with multiple unpaid
collections some outs for several years. Once all
have been satisfied, make timely payments on
subsequent obligations for 12 months, satisfactory
credit is re-established.
 Unpaid collections are considered “Open, Recent
Derogatory Credit” regardless of age
 No lates in last 12 months on manually UW loans
 Obtain credit explanation even if not required by AUS
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW CREDIT:
Judgments/CCCs/Disputed Accts
Topic
Description
Judgments
 Must be paid in full or a satisfactory payment plan is in effect at
time of application with no late payments
Consumer
Credit
Counseling
 Permitted with 12 months satisfactory repayments and counseling
agency approves new credit
Disputed
Accounts
 VA (product code 07): Follow the DU findings for accounts in
dispute.
 If the accounts in dispute are reflecting a balance, the disputed
account with the balance must be paid off and reflect a zero
balance via credit supplement.
 If an Approved/Eligible is obtained, follow the findings as long as all
disputed accounts have zero balances or a supplement has been
provided to show each account with a zero balance.
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
UW:
Compensating Factors
Topic
Description
Compensating
Factors
•
•
•
Sample
Compensating
Factors
•
•
•
•
•
•
•
•
•
•
•
•
Valid compensating factors should logically be able to compensate for the
identified weakness in the loan. Should represent unusual strength rather than
mere satisfaction of basic program requirements.
Eg., Sufficient assets for closing or meets residual income guidelines is not a
compensating factor.
Eg., Significant liquid assets may compensate for a residual income shortfall
whereas long term employment would not.
Excellent credit history
Conservative use of consumer credit
Minimal consumer debt
Long-term employment
Significant liquid assets
Sizable down payment
Existence of equity in a refinance loan
Military benefits
High residual income
Low DTI
Tax credits for child care
Tax benefits of home ownership
Understanding VA Guaranteed Home Loans
Ratios, Residual Income
Topic
Description
Max DTI
 41% - VA uses a single ratio
 Ratios may be exceeded with:
 DU approval, or
 Existence of tax-free income (notate file of tax free income OR
gross up tax-free income to bring ratios down income)
 Manually underwritten loans – May be stretched to 46% if veteran
meets residual requirement with strong compensating factors (such as
high residual income – greater than 20%)
Residual
Income
 VA uses Residual Income – veteran should have at least the minimum
residual income remaining to qualify
 When the DTI > 41%, the residual income should be at least 20% over
stated guideline. Otherwise, a 2nd UW signature is required
 Residual Income is calculated based on the “total” number of
dependents and the number of persons residing in the household
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
72
Residual Income by Region
TABLE
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
73
FMC VA Overlays
Understanding VA Guaranteed Home Loans
FMC VA Overlays
Cont’d…
Understanding VA Guaranteed Home Loans
FMC VA Overlays
Cont’d…
Understanding VA Guaranteed Home Loans
FMC VA Overlays
Cont’d…
Understanding VA Guaranteed Home Loans
Property Requirements
THE PROPERTY
Understanding VA Guaranteed Home Loans
78
Property Requirements
 Minimum

Property Requirements
Safe, Sanitary, Sound
 Condominiums

HUD/FHA/USDA approvals OK prior to 12/7/09
 Foreclosed

approved by VA
Properties
MPRs paid for by Seller
Understanding VA Guaranteed Home Loans
79
The Appraisal Process

Follow FMC’s guideline on ordering VA Appraisals – Bulletin 10-30


Need a copy of the purchase contract


Provide copies of home and pest inspections if completed
Appraiser completes report



Ordered by FMC Corporate via the VA Portal – WebLGY
Within 10 business days
Electronic copy uploaded to WebLGY
Lender Appraisal Processing Program (LAPP)


Lender Staff Appraiser Reviewer (SAR) reviews and issues a Notice of Value
(NOV) to the Veteran
SAR has authority to adjust value up to 5%
Understanding VA Guaranteed Home Loans
80
Appraisal Requirements for
Loans > $417,000 ($625,000 in AK & HI)
Loan Amount
Appraisal Requirement
$417,001 - $650,000
VA-required appraisal
$650,001 - $1 million
VA-required appraisal and LARA
$1 million
(Exception basis)
VA-required appraisal and field review
•
Appraisals are ordered via The Appraisal System (TAS) by the FMC
Vendor Support Department
•
See FMC Bulletin 12-04 for the most current guidelines for ordering
VA Appraisals
Understanding VA Guaranteed Home Loans
VA Funding Fee
Sample Calculations
VA FUNDING FEE
Understanding VA Guaranteed Home Loans
82
VA Funding Fee
What is a VA Funding Fee?


This is a charge that most Veterans pay to use the VA Loan Guaranty Program (similar to
the FHA UFMIP)
A National Guard/Reservist member who has been on active duty under USC Title 10 for
90+ days will be considered “Regular Military” for funding fee purposes
Required at time of closing. Helps defray the cost of the VA Home Loan Program.




Calculated on the full loan amount.
Fee can be paid in cash, financed or paid from proceeds
Can be paid by veteran, seller or via premium pricing.
For loan amounts greater than $417,000, the Funding Fee can only be financed if the
loan amount + funding fee are less than the maximum loan amount for the MSA.
Amount varies by:





Type of veteran
Down payment amount
Transaction type
Type of loan
Use of the VA home loan program
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
Who is EXEMPT from the
VA Funding Fee?
Certain Veteran/borrowers are exempt from paying the fee

Veterans receiving service-connected compensation (for serviceconnected disabilities)

Veterans who would be receiving compensation for service-connected
compensation, if they did not receive retirement pay

Veterans rated by VA as eligible due to pre-discharge disability
examination

Veterans entitled to receive compensation, but who are presently in
receipt because they’re on active duty

Surviving spouses of veterans who died in service or from serviceconnected causes
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
VA Funding Fee
Cont’d…
How to verify exempt status:
Verify exempt status by obtaining:
• A properly completed and signed VA Form 26-8937, Verification of VA
Benefits Form, sent to and processed by VA
• For a Veteran who elected service retirement pay instead of VA
compensation, a copy of the original VA notification of disability rating and
documentation of the Veteran’s service retirement income, along with the 268937 form completed
OR
• Indications on the COE that the borrower is entitled as an unmarried surviving
spouse. Examine the COE for notations regarding Funding Fee exemptions!
Understanding VA Guaranteed Home Loans
Purchase, Cash Out, Construction
Loans – VA Funding Fee
Purchase &
Construction Loans
Effective
11/22/2011
Regular
Military /
Active
Duty
Reserves/
National
Guard
Cash Out Refinance
Down
Payment
First Time
Use
Subsequent
Use
Effective
11/22/2011
First Time
Use
Subsequent
Use
None4.99%
2.15%
3.30%
Regular Military
2.15%
3.30%
5%-9.99%
1.50%
1.50%
Reserves/ National
Guard
2.40%
3.30%
10% or
more
1.25%
1.25%
None4.99%
2.40%
3.30%
Type of Loan
First Time
Use
Subsequent
Use
5%-9.99%
1.75%
1.75%
IRRRL
.50%
.50%
10% or
more
1.50%
1.50%
Loan
Assumptions
.50%
.50%
Other Loan Types
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
VA Funding Fee
Sample Calculations
Example 1 – Funding Fee Financed:

Veteran has full entitlement available and is purchasing a home for $600,000, where
the county limit is $625,500





Veteran is eligible for 100% financing and is putting no money down
Funding Fee is $600,000 x 2.15% = $12,900
$600,000 + $12,900 = $612,900
Since the combined loan amount plus funding fee is less than the county
maximum of $625,500, the funding fee can be financed into the loan amount.
The final LTV for this transaction including the funding fee is 102.15%
Example 2 – Funding Fee NOT Financed:

Veteran has full entitlement available and is purchasing a home for $625,500, where
the county loan limit is $625,500.





Veteran is eligible for 100% financing and is putting no money down
Funding Fee is $625,500 x 2.15% = $13,448.25
$625,500 + $13,448.25 = $638,948.25
Since the combined loan amount plus funding fee is more than the county
maximum of $625,500, the funding fee cannot be financed into the loan amount
and must be paid in cash
The final LTV for this transaction including the funding fee is 100%
Understanding
Manufactured
Homes
Understanding
VA Guaranteed
Home
Loans
87
Veteran Allowable Fees & Charges
Veteran Non-Allowable Fees & Charges
VA FEES & CHARGES
Understanding VA Guaranteed Home Loans
88
VA Rates & Fees
Topic
Description
Interest Rates
 Interest rate is fixed and the payment is fully amortized
over the entire term of the loan.
Origination Fees
and
Discount Points
 Points are negotiated between LO and Veteran
Closing Costs
 See next slides for allowable and non-allowable fees
 See next slides for allowable and non-allowable fees
Chapter 8.2 of
VA Lender
Handbook
Understanding VA Guaranteed Home Loans
FYI – Veteran Fees & Charges
ALLOWABLE FEES:
The following fees are always allowed regardless of the 1% origination fee being charged.

















VA Appraisal fee - per allowable maximum appraisal fee schedule for that state
 Including 2nd appraisals requested by the Veteran for reconsideration of value
Compliance Inspection - Only if required by NOV
Credit report - In most cases should not exceed $50
Recording fees, taxes and stamps
Prorated tax and insurance escrow
Hazard insurance – if it was not paid directly out of pocket by eveteran outside closing
Survey and plot plan
Title Insurance, Title Policy, Title Exam, Title Search, Title Endorsement and any fees required to
prepare title work
Environmental protection lien endorsement
1% Origination Fee
VA Funding Fee
Discount Points
Closing protection letter – sometimes just listed as “CPL” (should not exceed $35, except in
Pennsylvania it is $75)
Interthinx DISSCO fraud protection report
MERS fee
Well and Septic inspection fees
Express mail fees (only for cashout refinances and IRRRL’s) – actual cost should be reasonable. If
not question it (over $50 should be questioned – ask for actual invoice)
Understanding VA Guaranteed Home Loans
90
FYI – Veteran Fees & Charges
UN-ALLOWABLE FEES:
The following fees are always unallowed if the1% origination fee
charged.
 Lender’s VA Appraisal fee – the
Veteran can only be charged for 1
appraisal unless VA deemed a 2nd
Appraisal mandatory
 Lender’s Inspection – If it is not
required on the appraisal/NOV, it cannot
be charged to the Veteran
 Settlement fee, escrow fee,
closing fee
 Document preparation fee
 Underwriting fee
 Processing fee
 Application fee – a Veteran can be
charged up front the cost of the appraisal
and credit report to ensure the loan officer
is not stuck with those fees if the veteran
walks away from the deal
UN-ALLOWABLE FEES cont’d:
The following fees are always un-allowed if
the1% origination fee charged.
 Pest Inspection fee
 Attorney fees if for something other than
title work













Assignment fee
Copying fee
E-mail fee
Fax fee
Photographs
Postage fees if not a cash out
refinance or IRRRL
Amortization schedule
Notary fee
Commitment fee
Trustee fee
Truth in lending fee
Mortgage broker fee
Tax service fee
Understanding VA Guaranteed Home Loans
91
FYI – Veteran Fees & Charges
VA FEES:
 The previous lists are not all inclusive. You may find something other than those listed.
These fees cannot be charged by the lender, title company or investor. Please refer
those to the Loan Production Officer for review.
 Unless a fee is mandated by a city, county or state, and it is not on the allowable fee list,
it cannot be charged to the veteran if a 1% origination fee was charged.
 If the 1% origination fee was not charged, the above list of unallowable fees can be
charged to the veteran provided they do not exceed 1%. If the lender chose to charge
the veteran a ½% origination fee, then items from the unallowable list can be charged
provided they do not exceed ½% of the loan amount.
 Finally, there are some fees that can never be paid by the veteran regardless of
whether the 1% origination fee was paid or not. Those are:
 Termite/Pest inspection
 Attorney Fee Charged as a Benefit to the Lender
 Mortgage Broker Fee
 Realtor Commission
 Prepayment Penalties
 HUD/FHA Inspection Fees for Builders
Understanding VA Guaranteed Home Loans
92
VA Processing Steps
Ordering a COE
Loan Analysis Worksheet
VA Forms & Disclosures
OTHER INFORMATION
Understanding VA Guaranteed Home Loans
93
VA Processing Steps
Understanding VA Guaranteed Home Loans
94
Loan Analysis Worksheet
 Loan Analysis Worksheet (VA Form 266393). This is where everything comes
together. There are 6 sections:
 Loan Data
 Borrower’s Personal and Financial Status
 Estimated Monthly Shelter Expenses
 Debts and Obligations
 Monthly Income and Deductions
 Disposition of Application and Underwriter
Understanding VA Guaranteed Home Loans
Loan Analysis Worksheet
Understanding VA Guaranteed Home Loans
Loan Analysis Worksheet
Sections A & B
Understanding VA Guaranteed Home Loans
Loan Analysis Worksheet
Sections C& D
Understanding VA Guaranteed Home Loans
Loan Analysis Worksheet
Sections E
Understanding VA Guaranteed Home Loans
Loan Analysis Worksheet
Sections E Cont’d…
Understanding VA Guaranteed Home Loans
VA Cash Out Refinance Worksheet
Understanding VA Guaranteed Home Loans
101
VA Jumbo Loans
Understanding VA Guaranteed Home Loans
VA Forms & Disclosures
Understanding VA Guaranteed Home Loans
103
VA Forms & Disclosures
Cont’d…
Understanding VA Guaranteed Home Loans
104
FYI - Reserve Guard Certification
Understanding VA Guaranteed Home Loans
105
Important TIPS / Hot Buttons
Resources
Trainings, Tools, Marketing & Support
MISCELLANEOUS
Understanding VA Guaranteed Home Loans
106
FYI – TIPS to remember
Hot Buttons
 Veterans purchasing loans with a non-veteran is OK but VA will only guaranty that
portion of the loan attributed to the veteran and a spouse. Eg., Non-married
borrower’s or two veterans may be OK; must be submitted directly to VA for
approval.
 If two veterans are purchasing a home together, the use of 2 certificates does not
mean you can double the guaranty or loan amount.
 We cannot issue a loan approval prior to an appraisal being ordered.
 A veteran can re-use VA benefits multiple times as long as there is sufficient
entitlement to cover the new loan and the new loan is for a Primary Residence.
 A Veteran may still do a IRRRL on a property they no longer occupy.
 401k loans may be disregarded
 Credit standards are a lot more stricter on VA loans compared to FHA loans
especially when there are unpaid open collection accounts.
Understanding VA Guaranteed Home Loans
FYI – TIPS to remember
Hot Buttons
 Review paystub for deductions that are required to be reflected as a debt such as
union dues or other job expenses reflected.
 List number of dependent’s once on DU. Eg., for husband and wife, list # of
dependents under the first borrower only and list zero under the other.
 If the veteran states he/she will be living in military quarters at no cost and his/her
spouse will be living in the subject property, you do not have to consider separate
household expenses.
 Debt Letter is no longer required because your COE will reflect if the veteran is
EXEMPT or has used the eligibility in the past.
 Counseling Checklist only has to be completed if the Veteran is on active duty or a
reservist.
 Child care statement and Nearest Relative Information is required
 Read VA DD214
Understanding VA Guaranteed Home Loans
FYI – TIPS to remember
Hot Buttons
 Income should be predictable
 Documents should support calculations used
 Part time income for borrowers with a full time job is considered overtime income
 Non taxable income can be grossed up for determining the ratio only. VA allows
grossing up 125%
 Reconcile any discrepancies
 List compensating factors
 Complete and include all necessary forms and certifications
 DOCUMENT, DOCUMENT, DOCUMENT!!!
Understanding VA Guaranteed Home Loans
VA Resources

VA Lender Handbook: http://www.warms.vba.va.gov/pam26_7.html

VA Circulars: http://www.homeloans.va.gov/new.htm

VA 2014 Loan Limits:
http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf

VA Approved Condominium list:
https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch

DU User Guide on VA Loans:
https://www.efanniemae.com/sf/guides/duguides/pdf/vaduug.pdf

ACE system (obtain Case Numbers): https://vip.vba.va.gov/portal/VBAH/Home

Paycheck deduction calculator:
www.paycheckcity.com/netpaycalc/netpaycalculator.asp
Understanding VA Guaranteed Home Loans
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Understanding VA Guaranteed Home Loans
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Understanding VA Guaranteed Home Loans