Created by Congress in 1944, the VA loan guarantee program has been a very important benefit for millions of eligible veterans. According to the VA, there are more than 1.5 million veterans in Florida, and many of them have used or will use VA loans. The Florida VA mortgage program helps provide loan financing to eligible veterans, and helps them purchase property with no down payment and without paying for private mortgage insurance (PMI). 

Although these are generally known as VA loans, the federal government is not actually loaning money to veterans. The government is guaranteeing loans made by regular mortgage lenders in case the buyer defaults. It’s important to note that the veteran must still qualify for the loan, and the mortgage lender will verify the veteran’s income, assets, and credit worthiness. In addition, the veteran must occupy the home within a reasonable time after the loan closes. 

Florida VA mortgages offer several advantages that regular mortgages may not, including:

  • No down payment required–in most cases
  • No monthly mortgage premium required
  • The loan may be up to 100 percent of the reasonable value of the property, which is established by a VA appraisal of the property
  • Flexibility in negotiating interest rates
  • Limited closing costs
  • No prepayment penalties

Who Is Eligible? 

Generally speaking, the VA loan guarantee program is available to veterans who served on active duty during specific periods, served for a minimum amount of time (ranging from 90 days to two years), and were honorably discharged. In 1992, the program was also expanded to include reservists and National Guard members, provided they served honorably for at least six years. Veterans will need to get a Certificate of Veteran Status by completing and submitting VA Form 26-8261a, available at any VA office or at www.va.gov/vaforms/, along with the required documentation.

 Veterans who had VA loans in the past may still be able to obtain another VA loan if they’ve paid their first VA loan off in full, or allowed another qualified veteran to assume the VA loan. In addition, an eligible veteran may have “remaining entitlement” available to use for another VA loan.

Getting a Loan 

Applying for a VA loan is no different than applying for conventional or FHA mortgages, with one exception. The VA must issue a certificate of reasonable value (CRV) based on an appraiser’s estimate of the value of the property to be purchased. That’s usually the first step in obtaining a VA loan, and anyone (buyer, seller, real estate professional, or the lender) can request a CRV by submitting a form or calling the Loan Guaranty Division at the nearest VA office.

Remember that a CRV only estimates the value of a property. It’s not an inspection, and doesn’t guarantee that a house is in good condition. Buyers should carefully inspect the property themselves or hire an inspection company to verify the home’s condition.

Funding Fee 

A funding fee for VA loans has to be paid by all veterans, except for certain exempt veterans. The fee can range from 1.25 percent to up to 3.3 percent, based on a number of factors, including the size of the down payment and the veteran’s service (reservists and National Guard members may pay a higher fee). The funding fee can be paid in cash, or included in the loan.

Talk to a Professional

The requirements for a VA loan sound complex, but a trained mortgage professional can help you determine your eligibility and get the most from your VA loan benefit. To find out more about VA mortgages in Florida, get my perspective by calling 407-733-6425.

 

Stephen Thaggard, NMLS 356309,  Sr Loan Officer, licensed in Florida

Embrace Home Loans, NMLS 2184, www.nmlsconsumeraccess.org, 485 N Keller Road, Suite 550, Maitland, FL 32751