VA Loan Programs by your Funding America mortgage broker!

As a mortgage broker professional I want to enhance your knowledge on one of our many mortgage programs including a VA (Veteran’s Affair) fixed rate loan for eligible veterans. Read throughout the program description and contact us with your questions or concerns.

Funding America provides numerous home equity loans as well as Fannie Mae and Freddie Mac programs.

PROGRAM FOCUS
A loan sponsored by the Department of Veteran’s Affairs (VA) for eligible veterans (i.e. honorably discharged veteran, active duty service member, unmarried surviving spouse, Reservist, National Guardsman). Downpayment and/or Closing Cost Programs modeled after Nehemiah Program are NOT eligible.

GEOGRAPHIC RESTRICTIONS
Available for New York State properties only.

LOAN TERM
10 - 30 years.

MAXIMUM LTV
ENERGY EFFICIENT MORTGAGES ARE NOT ELIGIBLE. TOTAL LOAN-TO-VALUE FOR ALL TRANSACTIONS

VA does not limit the total loan-to-value; however, secondary financing is prohibited only when it is intended to cover any portion of the purchase price, which exceeds the reasonable value of the property established by VA. Please call your mortgage broker at Funding America for the terms and conditions for secondary financing.

PURCHASE TRANSACTIONS --
A veteran can finance 100% of the lesser of the sales price or Certificate of Reasonable Value (CRV). In addition, the applicable VA Funding Fee may be financed.

INTEREST RATE REDUCTION REFINANCING LOAN (IRRRL)
Refinance Transactions. Maximum LTV is 100%. In addition, the applicable VA Funding Fee may be financed.

REGULAR (CASH OUT) REFINANCE TRANSACTIONS
Refinance Transactions. Maximum LTV is 90%. In addition the applicable VA Funding Fee may be financed

MAXIMUM LOAN AMOUNT

• Purchase or construction loans - $417,000 (including VA Funding Fee, if financed)
• Refinance transactions
• Existing VA loan as an IRRRL (Interest Rate Reduction Refinance Loan) - $417,000 (including VA Funding Fee, if financed)
• Regular (Cash-Out) Refinance - $144,000 (including VA Funding Fee, if financed)

NO MINIMUM LOAN AMOUNT

ENTITLEMENT & GUARANTY
The maximum guaranty of a VA loan is the lesser of the veteran’s available entitlement OR the maximum potential guaranty amount indicated below:

• For loans up to $45,000, 50% of the loan
• For loans of $45,001 up to $56,250, the guaranty will not exceed $22,500
• For loans of $56,251 up to $144,000, 40% of the loan, with a maximum of $36,000
• For loans of $144,001 up to $417,000, 25% of the loan, with a maximum of $104,250
• For IRRRL’s minimum guaranty of 25%
• For Joint Loans the guaranty is limited to that portion of the loan allocated to the veteran’s interest in the property, however, minimum guaranty of 25% of full amount is required.
• Example (veteran and non veteran): $90,000 Loan amount divided by 2 = $45,000 Veteran’s portion of $45,000 has a maximum guaranty of 50% ($22,500) $22,500 maximum guaranty divided by $90,000 = 25% minimum required guaranty

A LOAN SCENARIO WHICH RESULTS IN A GUARANTY CALCULATION OF LESS THAN 25% IS INELIGIBLE.

VA FUNDING FEE
Amount paid to VA by borrower for VA to provide insurance on loan. There is no separate monthly renewal. Different amounts are required based on the type of loan involved.
Call your mortgage broker for the different amounts i.e. Active Duty, Reservists, etc.

A mortgage worksheet can be filled out and submitted for review or you can call the branch manager for a complete mortgage application.

ELIGIBLE PROPERTIES
All eligible properties must conform to VA and Funding America guidelines:

• 1, 2, 3 and 4 unit detached and attached primary residences
• 1 unit PUD’s
• 1 unit condominiums (must be VA approved)
• Existing and new construction. (Builder must be VA approved)
• Modular/prefabricated homes.

• Second Homes
• Investment property
• Cooperatives
• Single wide mobile (manufactured) homes
• Doublewide mobile (manufactured) homes

UNDERWRITING HIGHLIGHTS
All loans must conform to VA and Funding America underwriting guidelines and the VA Lender’s Handbook with the following variances(see your mortgage broker):
MI CONTRACT UNDERWRITING IS NOT PERMITTED.
Underwriting Options
Refer to VA Lender’s Handbook

• Traditional/Standard
• Loan Prospector
• Desktop Underwriter
• Call your mortgage broker regarding the "Lender's Handbook"

• Full
• Streamlined (per DU or LP response)

Eligible Borrowers
The following types of borrowers are permitted:

• U. S. Veteran (refer to VA Lender’s Handbook )
• Unmarried Surviving Spouse of a U. S. Veteran

Loans requiring special underwriting and guaranty
Refer to VA Lender’s Handbook

• Joint loans (the co-borrower is not the veteran’s spouse; the veteran and one or more veterans)
• Loans to veterans in receipt of VA non-service connected pension
• Loans to veterans rated incompetent by VA
• IRRRL made to refinance a delinquent VA loan
• Detailed eligibility can be addressed by your mortgage broker professional

• A tri-merged credit report is required
• The allowable age of credit documents is 120 days (180 days for new construction)
• Satisfactory credit can be considered re-established after 12-24 months from the date of the most recent derogatory item
• Debts assigned by divorce decree to a former spouse need not be charged to the veteran, even when they appear on the veteran’s credit report - as long as they are being paid in a timely manner
• Chapter 7 Bankruptcy
• 2 years from the date of discharge in a Chapter 7 Bankruptcy is sufficient time to establish a veteran as a satisfactory credit risk
• May be disregarded if discharged more than five (5) years ago
• Chapter 13 Bankruptcy
• Satisfactory payment record for 12 months is required.
• Court approval/trustee letter

• Treated the same as a Chapter 13 Bankruptcy, satisfactory payment record for 12 months is required
• Approval to enter into the transaction from the Plan Administrator is required
• Collection Accounts: As a matter of policy, should be paid in full. Small disputed collection accounts for individuals who otherwise have CLEARLY EVIDENCED THEIR CREDIT WORTHINESS may not be required to be repaid at the discretion of the underwriter for the loan in question
• Child/Dependent Care Expense: For any child/dependent 10 years old or less, the cost for child/dependent care must be included as a recurring debt when underwriting the loan. A "Child Care Expense Statement” must be completed at the time of application to disclose who cares for the child/dependent and the related cost, if any. The expense must be included in the calculation of the residual income and ratio
• Your questions and concerns can be addressed by your mortgage broker professional

• For the purpose of computing the debt-to-income ratio, tax-free income may not be “grossed up” when determining the ratio and establishing its acceptability
• Income from such sources as workmen’s compensation and providing foster care can be used as qualifying income if it will continue for a minimum of three (3) years from date of closing
• Certain forms of temporary income, i.e., income from public assistance programs, may be used for qualification purposes if it will continue for a minimum of three (3) years from date of closing
• “Income” from an automobile allowance or other expense may be used to offset car payments for loan qualification purposes
• Ask your mortgage broker about changes in income

• Multi-Unit Subject Property: Six (6) months reserves are required and the veteran must demonstrate a previous 2 year landlord history to utilize rental income to qualify. Rental income used for existing properties is based on 75% of verified prior rent collected on the unit(s). The appraiser's opinion of the monthly rental income is used for new or proposed construction
• Rental of Existing Home: Proposed rental of the veteran’s existing property may be used to offset the mortgage only - no income to qualify
• Other Rental Property: For an experienced landlord, three (3) months PITI on the rental property must be evidenced in addition to receipt of the borrower’s tax returns to use the income to qualify
• Call your mortgage broker for details on rental information forms

• First and most important level of review. Analyzes “disposable” income or the amount of money which is left over each month after housing, tax and all other debt obligations have been met
• Minimum requirements have been established based on geographic region, loan amount and family size (call your mortgage broker for these amounts)
• Net monthly income is extrapolated from gross monthly income in the VA Loan Analysis by subtracting Federal, state and social security withholding allowances
• If the total residual income for a loan exceeds the minimum regional requirement by 20% or more, then the second level of review is not required
• Additional income supplements can be explained by your mortgage broker professional

Qualifying Ratio

• There is NO housing payment to income or “top” ratio
• Second level of review - traditional “bottom” ratio which is calculated by taking the sum of the PITI, HOA fees and total obligations divided by the total gross income
• The standard limitation is 41%
• Loans with a ratio in excess of 41% must be accompanied by a statement justifying the reasons and listing the compensating factors for approval, signed by the underwriter’s supervisor
• Ratios may change periodically, call your mortgage broker for updates

Utility and Maintenance Charges
Monthly utility and maintenance charges are determined by multiplying the subject property square footage by 14 cents. (Example: 1500 Square feet X $.14 = $210.00 per month.)

Downpayment
No minimum downpayment is required.

Cash Saved at Home
Acceptable as long as the source of the funds can be clearly documented and explained as well as the funds being deposited into a financial institution. The underwriter must review to determine the reasonableness of the accumulation based on the documentation presented.

Gifts

• Gifts do not need to be from a blood relative
• All closing costs may be gifted
• Additional information on gifting can be reviewed with your Mortgage Broker

Seller Concessions
Any concession or combination of concessions, which exceed 4% of the established reasonable value of the property, is considered excessive for VA loan purposes. Normal discount points and payment of the buyer’s closing costs are not considered a concession for purposes of determining if total concessions are within the established limit.

Grants
In order to utilize a grant from a non-profit organization for closing costs and/or downpayment assistance, the grant must be approved by the VA. You must contact the VA Regional Loan Center to verify if grant is approved. Your Mortgage Broker will handle these details.

REFINANCE TRANSACTIONS
For Interest Rate Reduction Refinance Loans (IRRRL):

• The principal amount of the refinance mortgage is limited to the amounts used to:
• Pay off the outstanding principal balance on the current VA loan.
• Pay related closing costs.
• Pay discount points not to exceed 2%.
• Pay related prepaids.
• Pay VA Funding Fee.

NOTE: The LTV is limited to 100% without the VA Funding Fee.

• There is NO cash back allowed and there is NO refund of the VA Funding Fee from the previous loan
• VA does not limit the total loan-to-value. Please refer to the VA Manual for the terms and conditions for secondary financing
• The veteran must be lowering his/her interest rate to be eligible for this type of loan (unless the previous loan was a VA ARM or the term of the IRRRL is shorter than the term of the existing loan)
• A copy of the original Note or a statement from the current lender verifying the current interest rate is required
• The veteran must own and occupy the property
• Ask your mortgage broker for details

• Lender certification that the current VA mortgage payment is current as of the closing date
• A new residential loan application
• A fully completed VA Interest Rate Reduction Refinancing Worksheet
• A signed VA Streamline Refinance Information Form
• Original Certificate of Eligibility
• Original pay stub
• A new tri-merged credit report
• Statement from current lender disclosing unpaid principal balance
• Copy of the recorded deed showing the veteran in title
• Compliance documents
• Standard doc paperwork will be covered in whole by your mortgage broker

Appraisal Requirements:

• For all single-family loans, a “short form” Fannie Mae Form 2055 will be required to verify that the appraised value is equal to or exceeds the new loan amount
• For 2-4 family properties, a Fannie Mae 1004/Freddie Mac 70 will be required
• Interior inspections are not required
• If the property value is not sufficient, then the loan amount must be lowered accordingly
• The appraisal fee must be collected upfront and the borrower must be quoted this fee on the Good Faith Estimate
• The appraisal does NOT have to be completed by a VA-approved appraiser
• Call your mortgage broker for details

• For certain refinances, credit qualifying is not necessary as long as the loan conforms to VA guidelines
• For all other transactions, the loan must be of investment quality. Residual income and the total debt ratio should be within VA guidelines
• If the existing loan will be more than 30 days past due on the date of closing, the IRRRL must be submitted as a prior approval
• Your mortgage broker will clarify all requirements

REGULAR (CASH OUT) REFINANCE TRANSACTIONS
The maximum cash out refinancing loan is limited to 90% of the property value shown on the CRV or NOV plus the applicable VA Funding Fee.
NOTE – The maximum loan amount is limited to $144,000 including the VA Funding Fee if financed.
Pay-off of a Non-VA loan is considered cash-out even if applicant receives no cash at closing. The subject property must be owned by the veteran and must be secured by a lien or liens against the subject property. The lien(s) to be paid off must be:

• Secured by the subject property
• Recorded (Lien of Record)
• Current – if delinquent, or for a tax lien, judgment, etc., the loan will be considered on a case-by-case basis only

• Appraisal will be assigned to a VA approved appraiser
• Any appraisals made “subject to repairs” will require a final inspection
• For IRRRL loans, see Refinance Section above
• Your Mortgage Broker will define each of the requirements in full

DISCLOSURES, TABLES & FORMS

• Certificate of Eligibility/Green (active duty service member/honorably discharged veteran)
• Certificate of Eligibility/Gold (Reservist/National Guardsman)
• Federal Collection Policy Notice
• Interest Rate and Discount Disclosure Statement
• VA Funding Fee Disclosure
• VA Streamline Refinance Information Form
• Verification of VA Benefit-Related Indebtedness Form
• Counseling Checklist for Military Homebuyers (Active Duty Applicants ONLY)
• VA Option Clause
• VA Allowable Fees
• Certification of Military Status for Reservists/National Guard
• Name and Address of Nearest Relative

For any questions, you can contact us here.

1.347.294.4200