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Department of Veterans Affairs

Manchester, NH Regional Loan Center

**Presents**

[The VA Home Loan Program]{.underline}

[For Real Estate Professionals]{.underline}

#### October 2004

**[INTRODUCTION]{.underline}**

The Manchester Regional Loan Center (RLC) is one of nine nationwide
locations handling Loan Production (LP) activities. The Manchester RLC
provides loan origination activities for seven states:

-   Connecticut

-   Maine

-   Massachusetts

-   New Hampshire

-   New York

-   Rhode Island

-   Vermont

    Toll Free Phone Number (800)827-6311, option 7

    Fax (603)222-5862

    Office E-mail Address nh_lp@vba.va.gov

    The purpose of this training guide is to provide information that
    will facilitate the processing of VA guaranteed loans in our area of
    jurisdiction. A more comprehensive reference for processing VA loans
    is the VA Lender's Handbook, VA Pamphlet 26-7. Other sources of
    information available on the internet are:

-   **VA National** website: *www.va.gov*

-   VA **National Loan Information** website: *www.homeloans.va.gov*

-   The **Manchester, NH** website:
    *www.vba.va.gov/ro/manchester/lgymain/loans.html*

-   Information concerning **Certificates of Eligibility**:
    *www.homeloans.va.gov/eligibility.htm*

-   Direct access to **VA Lender's Handbook**:
    *www.warms.vba.va.gov/pam26_7.html*

-   Website to **E-mail Various VA offices**:
    *www.homeloans.va.gov/contact.htm*

-   To **Download Various VA Forms**: *www.vba.va.gov/pubs/forms1.htm*

    ![](media/image2.emf){width="0.7347222222222223in"
    height="0.7118055555555556in"} Department of Veterans Affairs

    **What Is A VA Guaranteed Home Loan?**

    VA guaranteed home loans are made by lending institutions, such as
    Banks, Savings and Loan Associations, or Mortgage Companies to
    eligible veterans for the purchase of a home ***THAT MUST BE FOR THE
    VETERAN'S OWN PERSONAL OCCUPANCY***. To get a home loan a veteran
    must apply to a lender. If the loan is approved, VA will guaranty a
    portion of the loan to the lender. This guaranty protects the lender
    against loss up to the amount of guaranty, and allows a veteran to
    obtain favorable financing terms. There is no maximum loan limit set
    by VA, but most lenders generally limit VA loans for:

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-   A purchase up to \$240,000.

-   A Cash Out Refinance up to \$144,000.

    **Who Sets The Maximum VA Home Loan Limit?**

    Because lenders sell the VA mortgage after the loan closing to the
    secondary mortgage market, it is the secondary mortgage market,
    where the lender sells the mortgage, who set the maximum VA home
    loan limit. Generally speaking the secondary mortgage market is
    seeking at least a 25% loan guaranty from VA in order to purchase
    the VA mortgage from the lender. Because VA is governed by a law,
    which allows VA only to guaranty up to:

-   \$60,000. on a Purchase

-   \$36,000. on a Cash Out Refinance

    And the fact that generally the secondary mortgage market is seeking
    at least a 25% guaranty, lenders usually loan up to 4 times a
    veteran's entitlement, without a down payment being made by the
    veteran, provided that the veteran is income and credit qualified
    and the property appraises for the agreed upon price of the Purchase
    and Sales Agreement.

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-   **Please Note:**

    Ginnie Mae and Freddie Mac, part of the secondary mortgage market,
    announced on December 24,

    2003: "*GNMA will accept into their pools, VA Home loans up to
    \$333,700.00 , when the veteran combines*

    *his/her entitlement, with a down payment, equaling 25%."* For an
    example, to obtain a VA Home Loan

    of \$333,700.00, the veteran would need to use his/her entitlement
    of \$60,000, plus include a

    down payment of \$23,425.00.

    *Please check with the lender for more details and/or their
    acceptance.*

    **What Are The Benefits Of A VA Home Loan?**

-   No down payment ( unless required by the lender, or the purchase
    price is more than the reasonable value of the property.)

-   Negotiable interest rates; also available are Hybrid ARM mortgages.

-   Ability to finance the VA funding fee into the loan amount.

-   Closing costs are comparable, sometimes cheaper than other type of
    financing.

-   No private mortgage insurance.

-   An assumable mortgage.

    If the loan being assumed was dated prior to March 1, 1988; the
    assumption can be handled

    outside of the lender and VA. This is known as a simple assumption.

    If closed after March 1, 1988 the assumption must go through the
    lender holding the mortgage.

    Borrowers must qualify income and credit-wise.

    In a divorce situation, the assumption is processed through the VA
    Regional Loan Center.

    **Note**: It is the veteran whose entitlement is tied to the VA loan
    who decides whether to allow

    a non-veteran and/or a veteran with a Certificate of Eligibility to
    assume the VA loan. If another

    Certificate of Eligibility is not substituted for the original
    Certificate of Eligibility tied to the

    VA home loan, the veteran whose entitlement is tied to the loan will
    remain tied to the VA home

    loan until the loan is paid in full.

-   Right to prepay without penalty.

-   For homes inspected by VA during the construction of the home, a
    warranty from the builder and assistance from VA to obtain
    cooperation of the builder.

-   VA assistance to veteran borrowers in default due to temporary
    financial difficulties.

-   In some cases a veteran can get into a home without any money at
    all, including closing costs and pre-paids, if the seller is willing
    to pay.

-   VA has many approved housing assistance programs the veteran can use
    in conjunction with the

    VA Home Loan. These programs are designed to help veteran purchasers
    obtain either

    a subsidized interest rate, or down payment and closing cost
    assistance, or a second mortgage

    used for renovation and revitalization of the property. Please call
    VA's Loan Production Section

    to determine which programs are approved in your area. **Example**:
    Community Development

    Programs , First Time Home Buyer Programs, Housing Authority
    Programs, Affordable Housing

    Programs, and Second Mortgage Programs.

    What VA Does Not Do?

-   VA does not guaranty that the home is free of defects. VA only
    guarantees the loan, not the home. VA also does not get involved in
    the home inspection process. It is the veteran's responsibility to
    assure that he/she is satisfied with the property's condition. The
    appraisal is not an inspection.

    It is an opinion of value offered by a licensed fee appraiser.

-   If a home is built under the VA inspection process, VA can not
    compel the builder to correct construction defects although VA does
    have the authority to suspend a builder from the program.

-   VA cannot guarantee that a veteran is making a good investment.

-   VA cannot provide a veteran with legal services.

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**[How Do I Know If My Customer Is An Eligible Veteran?]{.underline}**

**HOW TO OBTAIN A CERTIFICATE OF ELIGIBILITY**

To request a Certificate of Eligibility (COE), the veteran must complete
VA Form 26-1880, Request for a Certificate of Eligibility for VA Home
Loan Benefits, and submit it along with proof of military service to
VA's Winston-Salem, NC, Eligibility Center.

Eligibility Center Contact Information

  ------------------------------ ----------------------------------------
  Standard Mailing Address       PO Box 20729, Winston-Salem, NC 27120

  Overnight Mailing Address      251 N. Main St., Winston-Salem, NC 27155

  Telephone Number               \(888\) 244-6711

  E-Mail Address                 NCELIGIB@vba.va.gov
  ------------------------------ ----------------------------------------

VA Form 26-1880 can be obtained at *www.vba.va.gov/pubs/forms1.htm,* by
calling/writing/e-mailing the Eligibility Center, from a local VA
Regional Office, or from a lender who participates in the VA home loan
program.

**ACE, Automated Certificate of Eligibility & On-Line Loan Status
Inquiry**

ACE is an Internet based application that allows lenders to obtain a COE
in a matter of 10-15 seconds. It will issue COE's for most first-time
users who served full-time active duty military or will give a
certificate if the veteran has an existing VA loan (for use with an
IRRRL). It will also allow lenders to check on status of loans submitted
for guaranty.

**Proof Of Military Service**

Acceptable documentation of military service depends on whether the
veteran served on regular active duty or in the Selected Reserves or
National Guard, or whether the veteran remains on regular active duty or
in the Selected Reserves or National Guard.

A.  For a veteran discharged from regular active duty after January 1,
    1950, a copy of DD 214 Certificate of Release or Discharge from
    Active Duty should be included with VA Form 26-1880. If discharged
    after October 1, 1979, Copy 4 of DD 214 should be submitted.

B.  If the applicant is on regular active duty and has not been
    previously discharged from active duty service, a statement of
    service which includes the name of the issuing authority (base or
    command) and is signed by or at the direction of an appropriate
    official is required. The statement must include the service
    member's name, SSN, date of entry on active duty and the duration of
    any time lost. If on active Selected Reserve duty, the statement of
    service should be from the unit Commanding Officer and should cite
    the length of time served with the reserve unit. (Faxed copies and
    photocopies are not acceptable.)

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C.  If veteran was discharged from the Selected Reserves or the National
    Guard, include copies of documentation of at least 6 years of
    honorable service. If discharged from the Army or Air Force National
    Guard, submit NGB Form 22, Report of Separation and Record of
    Service, or NGB Form 23, Retirement Points Accounting, or its
    equivalent. If discharged from the Selected Reserve, submit a copy
    of the latest annual points statement and evidence of honorable
    service. Unfortunately, there is no single form used by the Reserves
    or National Guard similar to the DD Form 214. It is the veteran's
    responsibility to furnish adequate documentation of at least 6 years
    of honorable service.

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D.  If the veteran is still serving in the Selected Reserves or the
    National Guard, include an original statement of service signed by
    the veteran's Commanding Officer or Personnel Officer. It should
    show the date of entry into veteran's current tour of duty, list all
    previous service, and all previous service numbers. It must be
    identified with the veteran's social security number and date of
    birth. (Faxed copies and photocopies are not acceptable.) At least 6
    years of honorable service must be documented.

**Personnel Reserve Centers**

If a reservist needs to obtain copies of point statements or other
documentation that reflects 6 years participation with evidence of
honorable discharge contact:

+------------------+--------------------------------+-----------------+
| **Branch**       | **Type of Form**               | **Telephone**   |
+------------------+--------------------------------+-----------------+
| Army/Air         | NGB 22, Report of Separation & | \(314\)         |
| National Guard   | Record of Service              | 592-0123        |
+------------------+--------------------------------+-----------------+
| Army Reserve     | DARP FM 249-2E or ARPC FM 606, | (314 592-0123   |
|                  | Chronological Statement of     |                 |
|                  | Retirement Points              |                 |
+------------------+--------------------------------+-----------------+
| Navy Reserve     | NRPC 1070-124, Annual          | \(800\)         |
|                  | Retirement Point Record        | 966-9174        |
+------------------+--------------------------------+-----------------+
| Air Force        | AF 526, Point Summary Sheet    | 800. 525-0102   |
| Reserve          |                                |                 |
|                  |                                | ext. 388 or 403 |
+------------------+--------------------------------+-----------------+
| USMC Reserve     | NAVMC 798                      | \(314\)         |
|                  |                                | 538-4200 or     |
|                  |                                | 4147            |
+------------------+--------------------------------+-----------------+
| Coast Guard      | CG 4175                        | \(314\)         |
| Reserve          |                                | 538-4200 or     |
|                  |                                | 4147            |
+------------------+--------------------------------+-----------------+

**Processing Time - Eligibility Center**

-   All applications are processed in order by receipt date regardless
    of mode of submission.

-   Turnaround time (including mailing time) for complete applications
    not requiring development normally runs about calendar14 days.

-   Employees at the Center only have access to records of processed
    applications. So, it is best to wait at least 10 days after mailing
    before calling for the status of an application.

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-   A relatively small percentage of applications require development
    which can extend the processing period. This development might
    involve return to the requester for additional information or it
    might involve development internal to VA. In some cases, it will be
    necessary to research information regarding a previous VA loan(s) or
    resolve such issues as character of discharge, service-connected
    disability, or surviving spouse benefits. When a delay for internal
    VA development is required, the requester is always advised by
    letter.

    **QUICK REFERENCE CHART FOR ELIGIBILITY**

  --------------------- ----------------------- --------------------------
  **ERA**               **DATES**               **MINIMUM SERVICE\***

  WWII                  09/16/40 - 07/25/47     90 continuous days

  Peacetime             07/26/47 - 06/26/50     181 days

  Korean                06/27/50 - 01/31/55     90 days

  Post-Korean           02/01/55 - 08/04/64     181 days

  Vietnam               08/05/64 - 05/07/75     90 days

  Post-Vietnam          05/08/75 - 09/07/80     181 days

  Post-Vietnam          09/08/80 - 08/01/90     2 years

  Persian Gulf          8/2/90 - undetermined   2 years or period called
                                                to active duty, not less
                                                than 90 days
  --------------------- ----------------------- --------------------------

(Veterans eligibility requires honorable service)

  ---------------------------- ------------------------------------------
  **OTHER ELIGIBLE PERSONS**   **MINIMUM SERVICE REQUIRED**

  Active duty member\*\*       90 continuous days (181 during peacetime)

  Active Reserve or National   6 years in Selected Reserves
  Guard                        

  Unmarried surviving          No time requirement. Veteran must have
  spouse\*\*\*                 died on active duty or from a
                               service-connected disability.

  POW/MIA spouse               Veteran must have been POW or MIA 90 days.
  ---------------------------- ------------------------------------------

Veterans who require walk-in service can visit the Manchester, NH RLC
during the hours of 7:30 am to 4:00 pm EST, Monday through Friday to
apply for a certificate. In some cases, a COE may be obtained at other
VA Regional Offices; however, most Regional Offices provide limited
walk-in service, if any, and veterans should phone the specific office
prior to making a trip.

**Eligibility For Unmarried Surviving Spouse**

An unmarried surviving spouse of a veteran who died on active duty or as
the result of a service-connected disability is eligible for home loan
benefits.

-   VA Form 26-1817, Request for Determination of Loan Guaranty
    Eligibility-Unmarried Surviving Spouses, must be completed and
    submitted to the Eligibility Center.

-   A loan obtained with a surviving spouse Certificate of Eligibility
    requires an affidavit at closing that the surviving spouse is not
    re-married.

    **[RESTORATION OF PREVIOUSLY USED ENTITLEMENT]{.underline}**

    Entitlement previously used in connection with a VA home loan may be
    restored under certain circumstances. Once restored it can be used
    again for another VA loan. Restoration of previously used
    entitlement is possible if

-   The property which secured the VA guaranteed loan has been sold,
    **and** the loan has been paid in full, **or**

-   An eligible veteran buyer has agreed to assume the outstanding
    balance on a VA loan and substitute his or her entitlement for the
    same amount originally used on the loan. The assuming veteran must
    also meet occupancy, income and credit requirements of the law.

    **Special Restoration**

    In addition to the basic restoration criteria outlined above, a
    veteran may obtain restoration of the entitlement used on a previous
    VA loan under any of the following circumstances:

-   The previous VA loan has been paid in full and the veteran has made
    application for a loan to be secured by the same property which
    secured the previous VA loan, or

    ***Not***e: *This includes refinancing situations in which the
    previous loan will be paid off at closing from a VA refinancing loan
    on the same property.*

-   The previous VA loan has been paid in full, but the veteran has not
    disposed of the property securing the loan. The veteran may obtain
    restoration of the entitlement used on the previous loan in order to
    purchase a different property one time only. Once such restoration
    is effected, the veteran's COE will indicate the one-time
    restoration. It will also advise that any future restoration will
    require disposal of all property obtained with a VA loan.

**How to Apply for Restoration**

The veteran must complete and send VA Form 26-1880, Request for a
Certificate of Eligibility, to the appropriate Eligibility Center. If
the veteran has evidence of payment in full of any previous loans
(HUD-1, settlement statement, etc.), a copy should be included.
Additionally, any previously issued COE's should be included.

**PREQUALIFICATION
WORKSHEET**![](media/image3.emf){width="1.2256944444444444in"
height="0.7666666666666667in"}

Proposed Loan Amount \$ *183,600* Household Size (all members of the
household): 3

**1. GROSS MONTHLY INCOME \$*4843.00* (1)**

2\. Monthly Housing Expense (PITI)

a\. Principal and Interest 6.75%\*\* *\$1191.00*

b\. Property Taxes *\$ 183.00*

c.  Homeowners Insurance \$ *45.00*

**TOTAL *\$1419.00 (2)***

3\. Monthly Debts and Obligations

a\. Car Loan(s) *\$ 450.00*

b\. Revolving Charge Accounts *\$ 80.00*

c\. Other Installment Loans \$\_\_\_[0]{.underline}\_\_\_\_\_

d\. Child Care Expenses, Child Support or Alimony \$ 325.00

**TOTAL \$ *855.00 (3)***

4\. Monthly Estimate Maintenance & Utilities of the Home ***\$140.00
(4)***\
Please use 14 cents times the subject property's gross living area.

For a 1000 sq. ft. dwelling this would total \$140.00.

5\. Monthly Income Taxes

a\. Federal Income Tax *\$ 251.00*

b\. State Income Tax \$\_\_\_[0]{.underline}\_\_\_\_\_\_

c\. Social Security/Medicare 7.65% *\$ 370.00*

**TOTAL** ***\$ 621.00 (5)***

6\. Residual Income

a.  Amount required by family size *\$909.00*

> Determine how many members reside in the veterans household.
>
> Count all members without regard to the nature of the relationship.
>
> Use the " Tables of Residual Incomes" on the page following this
> analysis,

b\. From worksheet (1) minus (2,3,4,5) ***Meets Residual plus 99%***
**\$*1808.00***

7.  Debt to Income Ratio **(2)** + **(3)** divided by **(1)** (ideal
    41%) **[47%]{.underline}**

**What Meets VA Standards?**

Generally speaking if the veteran meets the residual guideline and the
ratio is 41% or less, or if the ratio is greater than 41%, the veteran
should at least meet residual plus 20%.

**PREQUALIFICATION WORKSHEET**

Proposed Loan Amount \$ \_\_\_\_\_\_\_\_\_ Household Size (all members
of the household): \_\_\_\_\_\_\_\_\_

**1. GROSS MONTHLY INCOME \$\_\_\_\_\_\_\_\_\_(1)**

2\. Monthly Housing Expense (PITI)

a\. Principal and Interest \_\_\_\_\_\_%\*\* \$\_\_\_\_\_\_\_\_\_\_

b\. Property Taxes \$\_\_\_\_\_\_\_\_\_\_

c.  Homeowners Insurance \$\_\_\_\_\_\_\_\_\_\_

**TOTAL \$\_\_\_\_\_\_\_\_\_(2)**

3\. Monthly Debts and Obligations

a\. Car Loan(s) \$\_\_\_\_\_\_\_\_\_\_

b\. Revolving Charge Accounts \$\_\_\_\_\_\_\_\_\_\_

c\. Other Installment Loans \$\_\_\_\_\_\_\_\_\_\_

d\. Child Care Expenses, Child Support or Alimony \$\_\_\_\_\_\_\_\_\_\_

**TOTAL \$\_\_\_\_\_\_\_\_\_(3)**

4\. Monthly Estimate for Maintenance & Utilities of the Home (\$.14)
\$\_\_\_\_\_\_\_\_\_(4)

5\. Monthly Income Taxes

a\. Federal Income Tax \$\_\_\_\_\_\_\_\_\_\_

b\. State Income Tax \$\_\_\_\_\_\_\_\_\_\_

c\. Social Security/Medicare 7.65% \$\_\_\_\_\_\_\_\_\_\_

**TOTAL** \$\_\_\_\_\_\_\_\_\_(5)

6\. Residual Income

a\. Amount required by family size \$\_\_\_\_\_\_\_\_\_\_

b\. From worksheet (1) minus (2,3,4,5) (**Meets residual \_\_plus
\_\_\_\_)** **\$\_\_\_\_\_\_\_\_\_**

7\. Debt to Income Ratio **(2)** + **(3)** divided by **(1)** (ideal
41%) **[\_\_\_\_\_\_\_\_\_%]{.underline}**

**Tables of Residual Incomes**

**See Section 4.09 of VA Lenders Handbook**

For loan amounts of \$79,999 and below

  -------------- ------------ --------------- -------------- -------------- --------------
  **Family                    **Northeast**   **Midwest**    **South**      **West**
  Size**                                                                    

  1                           **\$390**       \$382          \$382          \$425

  2                           **\$654**       \$641          \$641          \$713

  3                           **\$788**       \$772          \$772          \$859

  4                           **\$888**       \$868          \$868          \$967

  5                           **\$921**       \$902          \$902          \$1,004

  Over 5         Add \$75 for                                               
                 each                                                       
                 additional                                                 
                 member up to                                               
                 a family of                                                
                 7                                                          
  -------------- ------------ --------------- -------------- -------------- --------------

For loan amounts of \$80,000 and above

  -------------- ------------ --------------- -------------- -------------- --------------
  **Family                    **Northeast**   **Midwest**    **South**      **West**
  Size**                                                                    

  1                           **\$450**       \$441          \$441          \$491

  2                           **\$755**       \$738          \$738          \$823

  3                           **\$909**       \$889          \$889          \$990

  4                           **\$1,025**     \$1,003        \$1,003        \$1,117

  5                           **\$1,062**     \$1,039        \$1,039        \$1,158

  Over 5         Add \$80 for                                               
                 each                                                       
                 additional                                                 
                 member up to                                               
                 a family of                                                
                 7                                                          
  -------------- ------------ --------------- -------------- -------------- --------------

**What Can The Seller Pay?**

**[The Seller Can Pay For:]{.underline}**

a.  All of the veteran buyer's closing costs,

> This does not include prepaid items ( hazard insurance, escrow
> requirements for real estate
>
> taxes or hazard insurance), and prorations of real estate taxes.

b.  Points as appropriate to the market.

> Example: If it is customary that lenders are charging two discount
> points to obtain the average
>
> on going interest rate, than 2 discount points would be appropriate to
> the market.
>
> **[The Seller Typically Pays For:]{.underline}**

a.  The Pest Inspection - VA regulations state that the veteran cannot
    pay for the wood destroying insect report. This may be paid for by
    the seller, or it might be paid for by a third party.

**[Is There Anything Else The Seller Can Pay For?]{.underline}**

The seller can pay for the following items providing the total of these
do not exceed 4% of the

Reasonable Value of the property as established by the VA fee appraiser.

a.  Payment of the veteran-buyer's funding fee.

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b.  Payment of the veteran -buyer's prepaids (pro-ration of real estate
    tax and hazard insurance,

    and hazard insurance)

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b.  Payment of points above what is appropriate to the market.

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d.  Gifts such as television sets, cars, etc.

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e.  Payment of points to provide for a temporary buydown.

f\) Pay off of credit balances or judgments on behalf of the veteran.

**Purchase and Sales Contingency**

**Required By VA**

The VA Option Clause is a mandatory attachment to the Purchase and Sales
Agreement.

It must be signed by the parties to the Purchase and Sales Agreement.

**VA OPTION CLAUSE**

"It is expressly agreed that, notwithstanding any other provisions of
this contract, the purchaser shall not incur any penalty by forfeiture
of earnest money or otherwise or be obligated to complete the purchase
of the property described herein, if the contract purchase price or cost
exceeds the reasonable value of the property established by the
Department of Veterans Affairs. The purchaser shall, however, have the
privilege and option of proceeding with the consummation of this
contract without regard to the amount of reasonable value established by
the Department of Veterans Affairs."

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Veteran- buyer

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\
Co-borrower

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Seller

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Seller

> **Funding Fee & Special Programs**
>
> The veteran must pay a funding fee to help defray costs of the VA home
> loan program.
>
> The funding fee is not private mortgage insurance or FHA's MIP. It is
> nonrefundable.

######## VA FUNDING FEE SCHEDULE

**Purchase and Construction Loans**

  ----------------- ----------------- ----------------- -----------------
  **Veteran Type**  **Down Payment**  **Percentage for  **Percentage for
                                      First-Time Use**  Subsequent Use**

                                                        

                    None              2.15%             3.3%

  Regular Military  5% or more        1.50%             1.50%

                    10% or more       1.25%             1.25%

                                                        

                    None              2.4%              3.3%

  National Guard/   5% or more        1.75%             1.75%

  Reserves          10% or more       1.5%              1.5%
  ----------------- ----------------- ----------------- -----------------

**Other Loans**

  ----------------------------------- -----------------------------------
  **Type of Loan**                    **Percentage for Either Type of
                                      Veteran**

                                      

  Interest Rate Reduction Refinance   .50%
  (IRRRL)                             

  Loan Assumptions                    .50%
  ----------------------------------- -----------------------------------

**Who Is Exempt From Paying The Funding Fee?**

The following persons are exempt from paying the funding fee:

-   Veterans receiving VA compensation for service- connected
    disabilities.

-   Veterans who would be entitled to receive compensation for
    service-connected disabilities

    if they did not receive military retirement pay.

    **[ENERGY EFFICIENT MORTGAGES (EEM's)]{.underline}**

    EEM's are loans to cover the cost of making energy efficiency
    improvements to a dwelling.

    Funds for energy efficiency improvements are considered part of the
    total loan.

    They can be made in conjunction with:

-   A VA loan for the purchase of an existing dwelling, or

-   A VA refinancing loan secured by the dwelling.

    The mortgage may be increased by:

-   Up to \$3,000 based solely on the documented costs of the energy
    improvements

    Or:

    **\
    **

-   Up to \$6,000 provided the increase in monthly mortgage payment does
    not exceed the likely reduction in monthly utility cost

    Or:

-   More than \$6,000 subject to a value determination by VA.

    If the labor is to be performed by the veteran, the loan increase
    will be limited to the amount necessary to pay for materials.

    **Overview Of VA Credit Standards**

    The applicant's past repayment practices on obligations are the best
    indicator of their willingness to repay future obligations.
    Generally VA looks at the last 12 months of the applicant's payment
    history. The last 12 months should show a clean payment pattern.

    When there is an absence of a credit history, the determination of
    the applicant's payment record on utilities, rent, automobile
    insurance, or other expenses can be used.

    Collection accounts do not have to paid off but will be taken into
    consideration in the overall credit picture.

    Liens or judgments must either be paid in full, or subject to a
    repayment plan with a history of timely payments.

    The fact that a bankruptcy exists in an applicant's credit history
    does not disqualify the loan. If the bankruptcy was discharged
    within the last one to two years, it is probably not possible to
    determine the applicant(s) a satisfactory credit risk unless:

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-   The bankruptcy was caused by circumstances beyond the control of the
    applicant(s).

-   The applicant(s) have obtained consumer items on credit subsequent
    to the bankruptcy and have satisfactorily made the payments over a
    continued period in a timely manner.

    If an applicant is participating in a Consumer Credit Counseling
    plan, they may be determined to be satisfactory credit risk if they
    demonstrate 12 months satisfactory payments, and the Counseling
    agency approves the new credit.

    For commission, sales income, or self employed; the income is
    generally averaged over the past two years from the last two years
    tax returns, and a year to date profit and loss statement.

    12 months of employment with the same employer is generally looked
    at favorably.

    Less than 12 months of employment may be looked at favorably if the
    applicant is in a skilled position; nurse, medical technician,
    paralegal, computer analyst, etc. with documentation of the
    appropriate education.

    Income from overtime, part time jobs, and bonuses are generally not
    considered reliable unless it has continued for two years.

    A veteran can purchase up to a 4 unit multi family home but must
    occupy one unit as his/her primary residence.

    a\) In order for 75% of the rental income to be considered, the
    veteran:

-   Must demonstrate previous landlord experience.

-   Have 6 months reserves. This can be in the form of a gift or
    savings.

b.  If the rental income is not needed to qualify for the loan, then the
    above does not apply.

A veteran who will be renting his/her current single family home to
purchase a primary residence which is another single family backed by a
VA's home loan, may use verified rental income to offset the old
mortgage (PITI) debt. No reserves or previous landlord experience is
required. If s/he has another rental property, three months of reserves
must be documented and tax returns with all schedules supplied.

If an applicant is a co-signor on a liability, and there is evidence
that loan payment is being made timely by someone else, that loan
payment may be excluded from the applications obligations.

Alimony and Child Support can be considered if receipt of them for the
last 12 months can be provided.

![](media/image2.emf){width="0.7347222222222223in"
height="0.7118055555555556in"} **Myths About VA**

VA receives many telephone calls from veterans who are feeling they are
being discriminated against. They have been advised that the seller will
not accept a VA buyer because:

a\) VA holds up the loan application too long.

b.  VA is too picky regarding the condition of the property being
    purchased, or it's too difficult:

-   to get a condominium VA approved.

-   to do " Proposed Construction " VA.

**Did You Know ?**

( *Myth - VA Holds Up The Loan Application Too Long.)*

a.  Nine times out of ten it is not VA who reviews the loan application.
    Ninety-Eight percent of

all VA loans are reviewed and closed by the lender. The lender generally
does not submit

the loan to VA until after the loan is closed, and the veteran has
already moved into the

property. These types of lenders are called Automatic lenders. They do
not have to come

to VA for approval prior to closing. Most automatic lenders also have
what is called

LAPP (Lender Appraisal Processing Program). Where a lender Staff
Appraisal

Reviewer (SAR) , reviews the appraisal. Some lenders depending upon how
efficient they

are, can close VA loans within a few weeks. If you are looking for fast
turnaround time, from

loan application to loan closing, VA suggests the veteran applicant use
a VA LAPP lender.

[LAPP LENDERS ACTIVE IN NEW ENGLAND & NEW YORK]{.underline}

+---------------------------------+-----------------+-----------------+
| ## LENDER                       | **Coverage in   | #               |
|                                 | New England**   | ## Phone Number |
+---------------------------------+-----------------+-----------------+
| ACCUBANC MORTGAGE CORP.         | MA, ME, NH      | 800 994-1700    |
+---------------------------------+-----------------+-----------------+
| ALLIED MORTGAGE CORP.           | MA,ME,NH        | 877 472-5626    |
+---------------------------------+-----------------+-----------------+
| AMERICAN HOME MORTGAGE          | All New England | 800-303-9257    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| AMERICAN MORTGAGE NETWORK, INC. | All New England | 888 373-3974    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| AMERICU CREDIT UNION            | NY              | 315-624-0900    |
+---------------------------------+-----------------+-----------------+
| BANK OF NEW YORK (THE)          | CT & NY         | 800 677-9000    |
+---------------------------------+-----------------+-----------------+
| BANKNORTH                       | MA&ME           | 800 462-3666    |
+---------------------------------+-----------------+-----------------+
| BEACON MORTGAGE CO.             | CT;MA;ME;NH;VT  | 800 485-7430    |
+---------------------------------+-----------------+-----------------+
| CENTRAL PACIFIC MORTGAGE CO.    | RI              | 401 732-2100    |
| DBA NEW ENGLAND PACIFIC         |                 |                 |
+---------------------------------+-----------------+-----------------+
| CHARTER ONE MORTGAGE            | NY              | 800 234-6002    |
+---------------------------------+-----------------+-----------------+
| CHASE HOME MORTGAGE CORP.       | All New England | 800 873-6577    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| CITIMORTGAGE                    | All New England | 800 667-8484    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| CITIZENS MORTGAGE CORP.         | All New England | 800 622-1130    |
+---------------------------------+-----------------+-----------------+
| COASTAL CAPITAL                 | NY              | 800 640-0100    |
+---------------------------------+-----------------+-----------------+
| COMMONFUND MORTGAGE             | NY              | 800 724-7748    |
+---------------------------------+-----------------+-----------------+
| CORINTHIAN MORTGAGE CORP        | All New England | 800 365-2779    |
+---------------------------------+-----------------+-----------------+
| COUNTRYWIDE HOME LOANS, INC.    | All New England | 800 556-9568    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| CRESCENT MORTGAGE SERVICES      | All New England | 800 554-7600    |
+---------------------------------+-----------------+-----------------+
| DEVERE CAPITAL CORP.            | Western NY      | 888 433-8373    |
+---------------------------------+-----------------+-----------------+
| DOWNEAST MORTGAGE CORP.         | ME              | 800 493-5466    |
+---------------------------------+-----------------+-----------------+
| EQUITY ONE, INC.                | All New England | 888 227-4313    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| FIRST HORIZON HOME LOANS        | All New England | 800 810-2161    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| FIRST MAGNUS FINANCIAL CORP DBA | MA, NH          | 877-625-5551    |
| MORTGAGE CONCEPTS               |                 |                 |
+---------------------------------+-----------------+-----------------+
| FIRST NIAGARA BANK              | NY              | 800 201-6621    |
+---------------------------------+-----------------+-----------------+
| FIRST PRIORITY                  | NY              | 716 651-LOAN    |
+---------------------------------+-----------------+-----------------+
| FRANKLIN SAVINGS BANK           | NH              | 800 414-2568    |
+---------------------------------+-----------------+-----------------+
| GMAC MORTGAGE CORP              | All New England | 800 888-GMAC    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| GRANITE BANK DBA OCEAN NATIONAL | NH, Part of ME  | 800 639-2132    |
| BANK                            |                 |                 |
+---------------------------------+-----------------+-----------------+
| GREYLOCK FEDERAL CREDIT UNION   | Western MA      | 800 207-5555    |
+---------------------------------+-----------------+-----------------+
| GUARANTY RESIDENTIAL LENDING    | CT, MA, NH, RI  | 800 955-4542    |
+---------------------------------+-----------------+-----------------+
| HOME FUNDING FINDERS            | NY              | 800 444-6313    |
+---------------------------------+-----------------+-----------------+
| HOMESTEAD FINANCIAL SERVICES    | NY              | 800 343-8979 in |
|                                 |                 | NY              |
|                                 |                 |                 |
|                                 |                 | 800 724-7047    |
|                                 |                 | out NY          |
+---------------------------------+-----------------+-----------------+
| HOMESTEAD FUNDING CORP.         | CT, MA, ME, NH  | 800 536-3223    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| HSBC MORTGAGE CORP.             | All New England | 800 338-4626    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| IRWIN MORTGAGE                  | CT;ME;MA;NH;RI  | 800 675-8065    |
+---------------------------------+-----------------+-----------------+
| IVY MORTGAGE CORPORATION (SIB   | All New England | 888 999-2489    |
| MTG)                            | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| KENNEBUNK SAVINGS BANK          | ME & NH         | 800 339-6573    |
+---------------------------------+-----------------+-----------------+
| KEYCORP MORTGAGE                | ME, NH, NY & VT | 800 487-8334    |
+---------------------------------+-----------------+-----------------+
| LACONIA SAVINGS BANK            | NH              | 800 832-0912    |
+---------------------------------+-----------------+-----------------+
| M & T MORTGAGE CORP.            | All New England | 800 726-5626    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| MCCUE MORTGAGE                  | CT              | 800 382-0017    |
+---------------------------------+-----------------+-----------------+
| MORTGAGE ACCESS CORP DBA        | All New England | 800 829-2274    |
| WEICHART                        |                 |                 |
+---------------------------------+-----------------+-----------------+
| MORTGAGE IT, INC.               | NY & NE         | 212 651-7700    |
+---------------------------------+-----------------+-----------------+
| MORTGAGE SERVICE CENTER of NE   | CT, MA, NH, VT  | 800 447-1872    |
+---------------------------------+-----------------+-----------------+
| NATIONAL CITY MORTGAGE          | MA, NH & NY     | 800 367-9305    |
+---------------------------------+-----------------+-----------------+
| NAVY FEDERAL CREDIT UNION       | All New England | 800 368-3657    |
+---------------------------------+-----------------+-----------------+
| NE MOVES MORTGAGE               | All New England | 800 793-5626    |
+---------------------------------+-----------------+-----------------+
| NORTHWEST SAVINGS BANK          | Western NY      | 877 672-5678    |
+---------------------------------+-----------------+-----------------+
| NOTHNAGLE HOME SECURITIES       | Western NY      | 585 461-4110    |
+---------------------------------+-----------------+-----------------+
| NVR MORTGAGE CORP.              | Western NY      | 800 926-9966    |
+---------------------------------+-----------------+-----------------+
| OLYMPIA MORTGAGE                | NY              | 800 888-5280    |
+---------------------------------+-----------------+-----------------+
| PEOPLE\'S MORTGAGE CORPORATION  | New England     | 800 865-8654    |
+---------------------------------+-----------------+-----------------+
| PHH MORTGAGE SERVICES, INC./    | All New England | 800 446-0963    |
| CENDANT                         | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| PINNACLE FINANCIAL CORP.        | RI              | 800 421-5626    |
+---------------------------------+-----------------+-----------------+
| PLYMOUTH SAVINGS BANK           | New England     | 800 234-7820    |
+---------------------------------+-----------------+-----------------+
| REPUBLIC BANK                   | All New England | 800 882-9125    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+
| RESIDENTIAL MORTGAGE SERVICES   | ME & NH         | 800 640-0753    |
+---------------------------------+-----------------+-----------------+
| SALEM FIVE MORTGAGE CORP.       | MA, ME, NH      | 800-472-5365    |
+---------------------------------+-----------------+-----------------+
| SAVINGS BANK OF THE FINGER      | Western NY      | 800-861-0120    |
| LAKES DBA FIRST NIAGARA         |                 |                 |
+---------------------------------+-----------------+-----------------+
| SCHAEFER MORTGAGE CORP.         | NH, VT          | 800 367-3778    |
+---------------------------------+-----------------+-----------------+
| ST. MARY'S BANK                 | NH              | 800 950-8850    |
+---------------------------------+-----------------+-----------------+
| STONEBRIDGE MORTGAGE            | MA              | 866-345-5363    |
+---------------------------------+-----------------+-----------------+
| STONEHAM (MA) CO-OPERATIVE BANK | MA, NH, RI      | 781 438-0430    |
+---------------------------------+-----------------+-----------------+
| SYRACUSE SECURITIES             | NY              | 315-424-0218    |
+---------------------------------+-----------------+-----------------+
| THE BANK OF NEW YORK MORTGAGE   | NY              | 914 899-6581    |
| CORP.                           |                 |                 |
+---------------------------------+-----------------+-----------------+
| THE WARWICK SAVINGS BANK        | NY              | 845 986-2206    |
+---------------------------------+-----------------+-----------------+
| UNIVERSAL MORTGAGE CORP.        | MA, RI          | 800 385-0112    |
+---------------------------------+-----------------+-----------------+
| WACHOVIA MORTGAGE CORP.         | All NE, NY      | 800 240-3862    |
+---------------------------------+-----------------+-----------------+
| WATERFIELD FINANCIAL CORP.      | MA, RI          | 800 932-6843    |
+---------------------------------+-----------------+-----------------+
| WEBSTER BANK                    | All New England | 888 681-7788    |
+---------------------------------+-----------------+-----------------+
| WELLS FARGO MORTGAGE CORP.      | All New England | 800 964-2226    |
|                                 | & NY            |                 |
+---------------------------------+-----------------+-----------------+

( *Myth - VA Holds Up The Loan Application Too Long.)*

> VA is required to review loan applications prior to closing for the
> following:

-   Lenders who do not have Automatic approval: VA generally only takes
    a few days to review the loan application. If the loan is placed on
    hold for missing documentation, VA will fax the suspense letter to
    the lender and will request the lender to fax the data back to
    expedite the process.

-   For veteran applicants who are either receiving a VA pension or have
    been rated

    incompetent: These take a little more time because VA's Loan
    Guaranty Division

    is working with other Divisions within VA, either for the betterment
    of the veteran,

    and/or to assure financial data is correct.

-   For joint loan applications between an unmarried veteran and a
    non-veteran, or two veterans

> using more than one Certificate of Eligibility.

i.  Should you have a veteran and a non-veteran (non spousal
    co-borrower),

> who wish to acquire a VA home loan together, VA will consider the non-
>
> veteran's income, credit, savings, etc., but VA can only guaranty the
>
> veteran's portion of the loan . Please turn to " Who Sets The Maximum
>
> VA Loan Limit" on page 2. If the lender needs a 25% guaranty, and VA
>
> can guaranty only on the veteran's portion, the amount of the loan
> guaranty
>
> is cut in half. Should your customers be an unmarried veteran and
> non-veteran, please
>
> consult with the lender to determine if a VA home loan is possible.

ii. If your customers are two veterans and/or a married couple with two
    Certificates of

Eligibility, VA suggests that only one Certificate be used but the
ultimate

decision on using two Certificates rests with the veteran purchasers.

(*Myth - VA is too picky regarding the condition of the property being
purchased.)*

b.  Please see " What VA Does Not Do " on page 3. VA does not get
    involved in

> the home inspection process. That is between the parties, however VA
> strongly
>
> recommends a home inspection be completed by a professional, hired by
> the veteran-
>
> buyer(s), to ascertain the condition of the property meets to their
> satisfaction. VA does
>
> require a Water Quality Analysis when the water source is private, and
> the seller (or another
>
> third party) must pay for the pest inspection in certain areas of New
> England and New York.
>
> Other than that VA goes by the safe, sound and, sanitary theory. If a
> fee appraiser sees an
>
> obvious defect ( such as water stains on the ceiling, stripped wires,
> peeling painted surfaces), the
>
> fee appraiser will condition the appraisal report that a professional
> assess the defective situation.
>
> Defective painted surfaces will be conditioned to be scraped and
> painted.

**Did You Know That?**

-   A veteran buyer can request a repair condition be waived. Generally
    the repair may be

    waived if the veteran buyer puts their request in writing, and
    submits the request to the

    lender, along with a bid from a professional ( if the fee appraiser
    has not provided an

    estimated cost to cure), which advises how much it would cost to do
    the repair. If

    the repair item(s) do not affect the livability of the property, the
    Reasonable Value

    of the property will be reduced minus the cost of the repair(s)
    waived, and or

    minus the repair(s) contributory value.

-   Any party to transaction, including the Realtor, can request an
    appeal of

    value, should there be a disagreement with the Reasonable Value the
    fee appraiser

    came in with. VA does not require the party submit evidence to
    support a different

    value, but it would be helpful to submit any supportive data,
    including recently sold

    comparables. Please submit an Appeal of Value request directly to
    the fee appraiser.

    **NEW**: Appraisers now contact a lender designated person prior to
    coming up with a

    final value if they feel the property value will be coming in low.
    This is one way VA

    is trying to expedite the loan process.

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```
-   Fee Appraisers on VA's panel are subject to time limitations. Should
    you have a

    problem with a fee appraiser regarding timeliness, please phone the
    Appraisal Division

    at 1-800-827-6311 and press 6.

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```
-   It is a VA requirement should the municipal water and sewer line run
    in the street

    in front of the property being purchased, and the property is
    serviced with a private well,

    and or septic system, that the property be connected to the
    municipal line. Yes, a waiver

    of this repair condition can be requested through the lender.
    However if the property is in

    Massachusetts, where Title Five regulation exists, the Title Five
    regulation may mandate

    the connection to the municipal sewer line. In this case VA could
    not waive the municipal

    sewer connection. However for all others, the veteran must put their
    request in writing,

    submit it to the lender, along with an estimate from a professional
    to do the connection.

    Please phone VA's Appraisal Division to determine if the Reasonable
    Value of the property

    will be reduced in this situation.

    *( Myth - VA is too difficult in getting a condominium VA
    approved.)*

    **Did You Know That?**

-   It is usually not difficult to get a condominium VA approved.

1.  Please check VA's Approved Condo List at: ***cpb.vba.va. gov***

```{=html}
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```
a.  If the condominium is not on VA's approved list, but is approved by
    HUD or USDA,

> evidence of this approval may expedite the VA approval process. Please
> contact our
>
> Appraisal Division at 800-827-6311, option 6 for more details!
>
> b\) If the condominium is not on VA's approved list, and the
> condominium is no longer

under the control of it's developer/ declarant, please obtain the
following from the

condominium's association, and submit them to the VA Regional Loan
Center Office for

review.

-   A copy of the Declaration and all Amendments. A Master Deed in
    Massachusetts.

-   A copy of the By-Laws. A Declaration of Trust in Massachusetts.

-   A copy of the site plan.

-   A copy of the management agreement, is one exists.

-   A copy of the unit deed.

-   A statement signed by a trustee, specifying if there are any
    existing or pending

    assessments, and or pending litigation affecting the condominium.

    *( Myth - VA is too difficult to do Proposed Construction.)*

    **Did You Know That?**

```{=html}
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-   Only the following exhibits are needed for Proposed Construction .

    These are given to the lender when the applicant makes loan
    application.

```{=html}
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```
-   A Description of Materials, signed and dated by the builder, and by
    the veteran-buyer.

    This can be on the builder's own letterhead.

-   A plot plan which includes the location of well/septic systems, if
    applicable.

-   A Dwelling/Building Plan, to include:

a.  all exterior building elevations.

b.  foundation or basement plan.

c.  plan of all floors.

d.  sectional wall details.

-   A certification signed and dated by either the builder, an engineer,
    or architect, which

    states " I certify that the construction exhibits for ( ID of the
    property by lot or block

    number, subdivision name) meet all local code requirements and are
    in substantial

    conformity with VA Minimum Property Requirements, including the
    energy

    conservation standards of the 1992 Council of American Officials '
    Model Energy

    Code and the requirement for lead-free water piping. (Note: VA will
    accept [HUD Form]{.underline}

    [92541]{.underline} Builder's Certification of Plans, Specifications
    and Site, in lieu of this

    certification).

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-   A ten year homeowner warranty program is not required by VA for
    proposed construction.