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Wednesday, September 28, 2016

Delaware VA Loan Guidelines

by John R. Thomas on November 12, 2010


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FTHB Book Cover   small 20101117044933 Delaware VA Loan Guidelines
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Delaware VA loans are loans that are offered by banks but are backed by the United States Veterans Administration.  This guarantee allows the banks to still offer 100% financing to qualifying participates.  The program began in 1944 after President Franklin D. Roosevelt signed the Servicemen’s Readjustment Act of 1944, also known as the GI Bill of Rights. Although the program has been adjusted several times since 1944, the purpose remains the same: To ensure that US veterans can secure a long-term loan for a home.

Prospective candidates for VA loans must meet the military service requirements set forth by the VA.  The requirements depend on when you served, how long you served and how you were discharged.  To determine if you are eligible for a VA loan, it is best to look on-line at the Veteran’s Administration website: www.va.gov. The guidelines are listed under the “Home Loan” benefit section and clearly outline who is eligible to obtain VA financing.  Qualifying candidates include Retired US Veterans with certificate of eligibility, active duty with proof of military service, unmarried surviving spouse of veteran deceased from service related death.

Eligible Branches of Service

  • Army
  • Air Force
  • Marine Corps
  • Navy
  • Coast Guard
  • Public Health Service
  • National Oceanic and Atmospheric Administration

Highlights of Delaware VA Loans

  • No Monthly Mortgage Insurance
  • No Down Payment Required for loans of $417,000 or less
  • Will lend a maximum of $1,000,000
  • Allowed to finance VA funding fee into the loan
  • No Pre-payment penalties
  • Lower Closing Costs than Conventional Loans
  • Seller Can pay up to 4% in closing costs or pre-paid items
  • Very Competitive Interest Rates

The Delaware VA loan limit  is $417,000 for a no-money-down loan on a single-family home, but additional jumbo amounts are available to qualified borrowers up to $1,000,000.

Jumbo loan rules:

  • A 25% down payment is required for any amount over $417,000.
  • You are required to pay the funding fee up front.
  • Your credit score must be 680+ if the loan amount is above $650,000 and sufficient debt-to-income ratio to determine what amount you are approved to borrow.
  • Other restrictions may apply.

There are many uses for a Delawre VA home loan, including:

  • Buying a home, condominium, or townhouse.
  • Building a new home.
  • Buying and improving a home at the same time.
  • Installing energy efficient improvements to a home.
  • Refinancing an existing Delaware VA loan to get a better interest rate.

The VA Loan Funding Fee is required by law and varies according to the type of loan, military service status, and other factors. A first-time VA home loan borrower with a no-money-down loan currently pays an amount equal to 2.15% of the loan. This amount is subject to change depending on legislation and other factors. Some borrowers are exempt from the funding fee:

  • Veterans on VA compensation for service-related disabilities.
  • Veterans who would receive compensation for service-related disabilities if they didn’t draw retirement pay.
  • Surviving spouses of military members who died in service or from service-related disabilities.

When necessary, the Veterans Administration reserves the right to make final exemption determination on a case-­by-case basis.

VA determines your eligibility and, if qualified, a certificate of eligibility (COE) will be issued. Your lender will need this document in order to provide you with a VA Loan. You may be able to request a certificate of eligibility through your lender. In some cases, however, you may have to request a certificate by sending in a request for the certificate of eligibility (and any required supporting evidence) to an eligibility center. Under “normal” circumstances, you should receive a response within 10 days.  Because this time may vary, it is strongly recommended that you allow your lender to order (ACE) – Automated Certificate of Eligibility.  When you receive your COE you will get an entitlement amount of $36,000.  This is full entitlement amount and doesn’t mean you are limited to only a loan of $36,000.  You are still able to borrower a 100% up to $417,000.

VA Loans require the appraisal to be ordered by the bank through the Veterans Administration online website.  The VA then assigns the appraisal request to a VA approved appraiser.  The property must meet VA appraisal guidelines or a list of required repairs will be called for by the appraiser.  Once the required repairs have been completed, the appraiser re-inspects the property to confirm the repairs are satisfactory.  The Appraisal is sent to a VA approved underwriter who will use the apprasial to determine the Notice of Value (NOV).

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