VA home loan guaranties are issued to help eligible service members, veterans, reservists and unmarried surviving spouses obtain homes, condominiums, residential cooperative housing units, and manufactured homes, and to refinance loans. For additional information or to obtain VA loan guaranty forms, visit http://www.homeloans.va.gov/.
Loan Uses: A VA guaranty helps protect lenders from loss if the borrower fails to repay the loan. It can be used to obtain a loan to:
In addition to the periods of eligibility and conditions of service requirements, applicants must have a good credit rating, sufficient income, a valid Certificate of Eligibility (COE), and agree to live in the property in order to be approved by a lender for a VA home loan.
To obtain a COE, complete VA Form 26-1880 -- “Request for a Certificate of Eligibility for VA Home Loan” -- and mail to: VA Loan Eligibility Center, P.O. Box 20729, Winston-Salem, NC 27120. It is also possible to obtain a COE from your lender. Most lenders have access to VA’s “WebLGY” system. This Internet-based application can establish eligibility and issue an online COE in seconds. Not all cases can currently be processed online – only those for which VA has sufficient data in its records. However, veterans are encouraged to ask their lenders about this method of obtaining a certificate before sending an application to the Eligibility Center. For more information, visit http://www.homeloans.va.gov/eligibility.htm.
Periods of Eligibility
World War II: (1) active duty service after Sept. 15, 1940, and prior to July 26, 1947; (2) discharge under other than dishonorable conditions; and (3) at least 90 days total service unless discharged early
for a service-connected disability.
Post-World War II period: (1) active duty service after July 25, 1947, and prior to June 27, 1950; (2) discharge under other than dishonorable conditions; and (3) 181 days continuous active duty service unless discharged early for a service-connected disability.
Korean War: (1) active duty after June 26, 1950, and prior to Feb. 1, 1955; (2) discharge under other than dishonorable conditions; and (3) at least 90 days total service, unless discharged early for a service-connected disability.
Post-Korean War period: (1) active duty after Jan. 31, 1955, and
prior to Aug. 5, 1964; (2) discharge under other than dishonorable conditions; (3) 181 days continuous service, unless discharged early for a service-connected disability.
Vietnam War: (1) active duty after Aug. 4, 1964, and prior to May 8, 1975; (2) discharge under other than dishonorable conditions; and (3) 90 days total service, unless discharged early for a service-connected disability. For veterans who served in the Republic of Vietnam, the beginning date is Feb. 28, 1961.
Post-Vietnam period: (1) active duty after May 7, 1975, and prior
to Aug. 2, 1990; (2) active duty for 181 continuous days, all of which occurred after May 7, 1975; and (3) discharge under conditions other than dishonorable or early discharge for service-connected disability.
24-Month Rule: If service was between Sept. 8, 1980, (Oct. 16, 1981, for officers) and Aug. 1, 1990, veterans must generally complete 24 months of continuous active duty service or the full period (at least 181 days) for which they were called or ordered to active duty, and be discharged under conditions other than dishonorable. Exceptions are allowed if the veteran completed at least 181 days of active duty service but was discharged earlier than 24 months for (1) hardship, (2) the convenience of the government, (3) reduction-in-force, (4) certain medical conditions, or (5) service-connected disability.
Gulf War: Veterans of the Gulf War era -- Aug. 2, 1990, to a date
to be determined -- must generally complete 24 months of continuous active duty service or the full period (at least 90 days) for which they were called to active duty, and be discharged under other than dishonorable conditions.
Exceptions are allowed if the veteran completed at least 90 days of active duty but was discharged earlier than 24 months for (1) hardship, (2) the convenience of the government, (3) reduction-in-force, (4) certain medical conditions, or (5) service-connected disability. Reservists and National Guard members are eligible if they were activated after Aug. 1, 1990, served at least 90 days, and received an honorable discharge.
Active Duty Personnel: Until the Gulf War era is ended, persons on active duty are eligible after serving 90 continuous days.
VA Guaranty Varies with Size and Type of Loan
The VA guaranty varies with the size of the loan, and is issued to protect lenders so they may make loans to eligible borrowers. Because the lenders are able to obtain this guaranty from VA, borrowers do not need to make a down payment, provided they have enough home loan entitlement.
The maximum guaranty amount is equal to 25 percent of the Freddie Mac conforming loan limit for a single family home. This limit changes yearly, but is set at $417,000 for calendar year 2008 ($625,500 for Hawaii, Alaska, Guam and the U.S. Virgin Islands).
2008 VA Home Loan Guaranty
|Loan Amount||Loan Type(s)||Maximum Potential Guaranty||Special Provisions|
|Up to $45,000||All||50% of the loan
|Minimum guaranty of 25% on IRRRL*|
|$45,001 - $56,250||All||$22,500||Minimum guaranty of 25% on IRRRL*|
|$56,251 - $144,000||All||40% of the loan amount, with a maximum of $36,000||Minimum guaranty of 25% on IRRRL*|
|Greater than $144,000||Purchase or construction of a home
Purchase of a condominium unit
Refinancing with an IRRRL
|Up to an amount equal to 25% of the Freddie Mac single family conventional conforming loan limit||Cash-out refinances have a maximum guaranty of $36,000
Minimum guaranty of 25%
* IRRRL (Interest Rate Reduction Refinancing Loan). The new IRRRL loan amount may be equal to, greater than, or less than the original amount of the loan being refinanced. This may impact the amount of the guaranty on the new loan, but not the veteran’s use of entitlement.
The total loan amount may include the Funding Fee, as well as up to $6,000 of home improvements to make the home more energy efficient.
An eligible borrower who wishes to use a VA-guaranteed loan to refinance an existing mortgage generally can borrow up to 90 percent of
the home’s appraised value. However, a loan to reduce the interest rate on an existing VA-guaranteed loan may include the entire outstanding balance of the prior loan, the costs of energy-efficient improvements, as well as closing costs, including up to two discount points. An eligible borrower who wishes to obtain a VA-guaranteed loan to purchase a manufactured home or lot can borrow up to 95 percent of the home’s purchase price.