Veterans Loan Assitance

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Purchase Loans and Cash out Refinance Loans

A Purchase Loan helps you purchase a home at a competitive interest rate often without requiring a down payment or private mortgage insurance. With a Purchase Loan, VA can help you purchase a home at a competitive interest rate, and if you have found it difficult to find other financing.

VA’s Cash-Out Refinance Loan is for homeowners who want to take cash out of your home equity to take care of concerns like paying off debt, funding school, or making home improvements. The Cash-Out Refinance Loan can also be used to refinance a non-VA loan into a VA loan. VA will Guaranty loans up to 100% of the value of your home.

Interest Rate Reduction Refinance Loan (IRRRL)

The VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA home loan. By obtaining a lower interest rate, your monthly mortgage payment should decrease. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.

IRRRL Facts

  • No appraisal or credit underwriting package is required when applying for an IRRRL.
  • An IRRRL may be done with “no money out of pocket” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
  • When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
  • 8No lender is required to give you an IRRRL, however, any VA lender of your choosing may process your application for an IRRRL.
  • Veterans are strongly urged to contact several lenders because terms may vary.
  • You may NOT receive any cash from the loan proceeds.

Eligibility
An IRRRL can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse your original entitlement.

Additionally

  • A Certificate of Eligibility (COE) is not required. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.
  • No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.
  • You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.
  • The occupancy requirement for an IRRRL is different from other VA loans. For an IRRRL you need only certify that you previously occupied the home.

Application Process
A new Certificate of Eligibility (COE) is not required. You may take your Certificate of Eligibility to show the prior use of your entitlement or your lender may use our e-mail confirmation procedure in lieu of a certificate of eligibility.

Loan Limits
VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.

The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to four times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price.

VA Funding Fee

Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a:

  • Veteran receiving VA Compensation for a service-connected disability, OR
  • Veteran who would be entitled to receive Compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
  • Surviving spouse of a Veteran who died in service or from a service-connected disability.

The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage. Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years. While this can save you money in interest over the life of the loan, you may see a very large increase in your monthly payment if the reduction in the interest rate is not at least one percent (two percent is better). Beware: It could be a bigger increase than you can afford.

Native American Direct Loan (NADL) Program

Since 1992, the Native American Veteran Direct Loan (NADL) program has provided eligible Native American Veterans and their spouses the opportunity to use their Department of Veterans Affairs (VA) home loan Guaranty benefit on Federal trust land.

What is a NADL?
VA provides direct home loans to eligible Native American Veterans to finance the purchase, construction, or improvement of homes on Federal Trust Land, or to refinance a prior NADL to reduce the interest rate.

Why Use the NADL Program?

  • The lender is the Department of Veterans Affairs
  • Dedicated VA staff to assist you
  • No down payment
  • Easy to qualify
  • No Private Mortgage Insurance cost
  • 4.25% interest rate. Interest rates are subject to change due to market fluctuations. VA evaluates these market trends and determines if interest rate reductions or increases are warranted.
  • Low closing costs
  • $424,100 loan maximum limit in most areas; some high-cost counties have higher loan limits
  • Fixed-rate 30-year mortgage
  • Re-usable benefit

How to Use the NADL Program
To obtain a NADL, the law requires that the tribal government must have signed a Memorandum of Understanding (MOU) with the Secretary of Veterans Affairs. The MOU spells out the conditions under which the program will operate on its trust lands.

Am I Eligible to Use the NADL Program?

  • You must have a valid Certificate of Eligibility to be eligible for the VA home loan benefit and have available entitlement. Please visit this page for information on how to get a Certificate of Eligibility.
  • The loan must be to purchase, construct, or improve a home on Federally-recognized trust, allotted lands, Alaska Native corporations and Pacific Island territories.
  • You must occupy the property as your home.
  • You must be a satisfactory credit risk.
  • Your income and that of your spouses, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the other costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.

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