VA
Loan Questions and Answers
Question: Can
I get a VA loan if I have had a
bankruptcy in the last few years?
Answer: VA
credit standards state that a veteran
with a bankruptcy less than 3 years
ago would generally not be considered
a satisfactory credit risk unless:
the veteran or spouse has obtained
items on credit since the bankruptcy
and has paid the obligations in
a satisfactory manner for a continued
period; and the bankruptcy was caused
by circumstances beyond the control
of the borrower, which would have
to be verified. A bankruptcy discharged
3 to 5 years ago must be given some
consideration in the underwriting
of the loan. A bankruptcy discharged
more than 5 years ago may be disregarded.
These are the minimum standards
that mortgage companies must follow
when making a VA loan. In 95% of
the cases, companies make the decision
to approve a loan without VA's prior
approval. Keep in mind that mortgage
companies also have money at risk
in giving you a VA loan, so they
may have stricter credit standards
than those mandated by VA.
Question: Why
do I have to pay a fee for a VA
home loan? Since I paid a fee for
my first loan, why is there a larger
fee for my second loan?
Answer: The
VA funding fee is required by law.
The fee, currently 2 percent on
no down payment loans, is intended
to enable the veteran who obtains
a VA home loan to contribute toward
the cost of this benefit, and thereby
reduce the cost to taxpayers. The
funding fee for second time users
who do not make a down payment is
3 percent. The idea of a higher
fee for second time use is based
on the fact that these veterans
have already had a chance to use
the benefit once, and also that
prior users have had time to accumulate
equity or save money towards a
down payment.
Second time users who make a down
payment
of at least 5 percent pay a reduced
funding fee of 1.5 percent, the
same as first time users making
the same down payment. For a 10 percent
down payment, the fee drops to 1.25
percent. The effect of the funding
fee on a veteran's financial situation
is minimized since the fee may be
financed in the loan.
Question: May
a veteran join with a non veteran
who is not his or her spouse in
obtaining a VA loan?
Answer: Yes,
but the guaranty is based only on
the veteran's portion of the loan.
The guaranty cannot cover the non-veteran's
part of the loan. Consult mortgage
companies to determine whether they
would be willing to accept applications
for joint loans of this type. Mortgage
companies that are willing to make
these types of loans will likely
require a down payment to cover risk
on the unguaranteed, non-veteran's
portion of the loan. Unlike other
loans, the mortgage company must
submit joint loans to VA for approval
before they are made. Both incomes
can be used to qualify for the loan.
However, the veteran's income must
be sufficient to repay at least
that portion of the loan related
to the veteran's interest in (portion
of) the property and the non-veteran's
income adequate to cover the rest.
