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Questions that frequently arise prior to applying for a VA loan.

• 1. What is a VA loan? When people talk about VA loans, they are usually referring to guaranteed home loans given to eligible veterans by private lenders. These loans are guaranteed by the Department of Veteran Affairs.
• 2. Why should I pursue a VA loan? There are many reasons why you should pursue a VA loan. First and foremost, VA loans allow home buyers to purchase a home with little or no money down. Other benefits to consider include:
  
    * A buyer can assume your loan if you decide to sell your home.
  
    * The elimination of mortgage insurance premiums.
  
    * Potentially lower closing costs.
  
    * No pre-payment penalties.
  
    * The potential to negotiate the interest rate.
  
    * Possible home warranties for a home inspected by VA during construction.
  
    * Possible VA assistance due to temporary financial hardships.
• 3. What does "guaranty" mean? All VA home loans are guaranteed by the Department of Veteran Affairs. If a borrower of a VA loan should default, the Department of Veteran Affairs compensates the lender for any loss due to the non-payment of the loan. This reduces the lenders risk and allows borrowers who are eligible for VA loans to get a home with little or no money down.
• 4. Does the VA guarantee the house too? It is important to understand that a VA guaranty has nothing to do with a home warranty or the condition of the home you are buying. The VA guaranty is simply protecting the lender in the event that you default on the loan. The VA can not guarantee that the home is in good condition or free from defects and it can not guarantee that you will be satisfied with the home. It is your responsibility to pay for a home inspection to ensure that the home is in good repair.
• 5. What is an "entitlement"? The "entitlement" is the maximum dollar amount the VA will pay the lender if you default on your loan. The standard VA entitlement is $36,000. However, there are some circumstances in which a borrower can qualify for an entitlement of up to $60,000. Lenders will usually offer a loan amount of up to four times the amount of the borrower's entitlement without requiring a down payment.
• 6. Is my entitlement a gift? No, you have to pay your mortgage just as you would if the entitlement didn't exist. The entitlement is there to protect the lender, not to act as a grant or a gift. If you do not make your monthly mortgage payments, the lender will foreclose on the property and you will lose your home.
• 7. If I am eligible for a VA loan, am I guaranteed to get one? No, you are not. Just because the VA will guarantee your loan does not mean the lender is required to extend the loan to you. All lenders follow specific underwriting guidelines and you must fall within those guidelines to qualify for a loan. You must also meet VA income and credit rating standards to receive a VA loan. If you meet VA requirements, but do not meet lender requirements, you can always try to find a lender more lenient in their underwriting policies.
• 8. Is my bankruptcy going to prevent me from getting a VA loan? Bankruptcy itself will not stop you from qualifying for a VA loan. However, there are some guidelines that your bankruptcy must meet one of the following requirements:
  
    * Your bankruptcy must have been discharged more than 2 years ago; or
  
    * Your bankruptcy must have been caused by circumstances beyond your control, must have been discharged between 1 and 2 years ago and you (and your spouse, if applicable) must have re-established satisfactory credit since then.
• 9. Will there be a price limit set on the home I can buy with a VA loan? When buying a home with a VA loan, there is no price limit set on the home you can buy. However, it is important to remember that if you want to get into a home without a down payment, lenders will usually only give you up to four times the amount of your VA entitlement. If, on the other hand, you have money that you are able to use for a down payment on your home, the dollar amount of the loan you qualify for will increase appropriately. The VA loan limit in Hawaii is $625,500.
• 10. Am I restricted to what type of home I can buy with a VA loan? Yes, you must be purchasing the home as your own primary residence. VA loans can not be used to purchase investment properties or commercial properties. When you obtain a VA loan, you will be required to certify that you intend to occupy the home you are buying. Also, not all condominiums are eligible for VA financing. To check if a certain condominium is eligible, please visit our Condo Eligibility Check page.
• 11. Am I restricted in regards to where I can purchase property? Yes. VA loans can only be used to purchase properties located in the United States or within United States' territories and/or possessions.
• 12. Where can I get a Certificate of Eligibility to prove to lenders that I qualify for a VA loan? To obtain your Certificate of Eligibility, you need to fill out a VA Form 26-1880 and submit it to the Department of Veteran Affairs Eligibility Center at PO. Box 20729, Winston-Salem, NC 27120 or contact us to submit it on your behalf using the automated ACE system.
• 13. How do I buy a home using a VA loan? There are a number of steps involved when buying a home with a VA loan. First, you must confirm that you are eligible for a VA loan by obtaining your Certificate of Eligibility. Then, the following steps are completed accordingly:
  
    * Get Qualified:
  Fill out the online application form on the top left hand corner of this page or call a VA Loan Specialist at 808.792.4251. A VA Loan Specialist will determine how much you qualify for as well as your estimated monthly payments.
  
    * Find a Real Estate Agent:
  If you don't already have a real estate agent, go to our Find An Agent section to review our list of qualified agents that can help you find the home of your dreams.
  
    * Narrow Down List of Properties:
  Based on the amount you're prequalified for, your Realtor will send you a list of properties that fit your specific criteria. From that list, you'll need to narrow it down to a select few so that your Realtor can schedule a showing with the seller's agent. Keep in mind that not all condominiums are eligible for VA financing, so if you are thinking of purchasing a condo, first check our Condo Eligibility Check page to see if your particular condo is approved for VA financing.
  
    * View Properties:
  Once you narrowed down the list, it's time to see the properties for yourself. This is where you can really decide which home will be the best fit for you and your family.
  
    * Submit an Offer:
  Once you decide which house you would like to purchase, your realtor will draft up an offer which will be accompanied by a prequalification letter from your VA Loan Specialist.
  
    * We'll do the Rest:
  Once the offer is accepted, sit back and relax as your VA Loan Specialist, Realtor & Escrow Officer handle the nuances of your purchase transaction. The process typically takes 30-45 days. After which, you will come in and sign the final loan documents. When this is all done, you will get your keys and officially be a new homeowner. It's that simple!
• 14. Why is there a fee associated with getting a VA loan? The law stipulates that you must pay a VA funding fee when obtaining a VA loan. This fee helps offset the government's and taxpayer's expenses in providing this benefit.
• 15. This is the second time I'm buying a home with a VA loan. Why is the fee higher? If you're taking out a second VA loan without making a down payment on the home you are purchasing, the fee will be higher this time around. This is because you already received the benefit of the VA entitlement and you are now taking advantage of the benefit a second time. If you want to reduce the amount of this fee you can do so by paying a down payment of at least 5 percent. If you pay a down payment of no less than 5 percent, you will be entitled to a reduced funding fee of 1.5 percent. If you pay a down payment of no less than 10 percent, the funding fee you pay will only be 1.25 percent. (Please note that National Guard and Reservist veterans will be required to pay a higher funding fee percentage as seen in this funding fee table.)
• 16. I am a single veteran currently stationed outside of the US and would like to use a VA loan to purchase a home. The VA is telling me that I can't do this even if I have a friend or family member occupying the home while I am out of the country. However, if I had a spouse, he or she could occupy the home and I could purchase it while I was out of the country. Isn't this discrimination against veterans who aren't married? No, it isn't discrimination. The law stipulates that a veteran's spouse can satisfy the occupancy requirements of a VA loan. The law states nothing about friends or relatives and therefore does not provide for this situation. Because of this, only a spouse can satisfy a veteran's occupancy permit.
• 17. Can I buy a home with someone who isn't a veteran and isn't my spouse? Yes, you can purchase a home with someone who is neither a spouse nor a veteran, but the VA guaranty will only apply to the veteran's portion of the loan. You will need to talk to your lender to see if this type of loan arrangement would be acceptable to them and what restrictions they may place on your loan.
• 18. If I die before the loan is paid in full, will the VA pay off the balance of my loan? No, VA loans do not include a death benefit. If you die, your spouse or co-borrower will need to continue the payments of the loan or the home will go into foreclosure. You can, however, purchase a mortgage life insurance policy. A mortgage life insurance policy, available from private insurance companies, would pay off your mortgage in the case of your demise.

* Please note that applications involving anything other than an honorable discharge will require further processing by the VA to determine whether or not the service was under honorable conditions.