More VA Mortgage Details
The Loan Amount cannot exceed VA's maximum loan amount.
Occupancy
Must be owner occupied. (There are exceptions, for example a veteran on active duty abroad, where the spouse continues to live in the residence … please talk with your mortgage consultant for more details). Kiddie condos are not an option, nor can a child (or other family member, other than a spouse) use a parent's eligibility for the purpose of buying a home. VA cannot be used for a vacation, investment, or second home.
Secondary financing
You might look for secondary financing if you are wanting to purchase a home that exceeds VA's loan limit, for example. This type of financing is allowed under a very specific set of circumstances. Most important, the secondary financing must be assumable. This can be very difficult to locate - be sure to talk with your mortgage consultant if you're planning on a second mortgage in conjunction with your home purchase.
Appraisals
VA's appraisal guidelines call for health and safety issues to be evaluated in addition to establishing value. For this reason, it is important NOT to focus on fix-up type homes needing work on health and safety related items. Should a fixer upper be purchased utilizing VA financing, all health and safety issues (as identified by the appraiser) would need to be fixed (typically by the seller) prior to closing. The appraised value for a VA must meet or exceed the agreed upon purchase price. The appraised value does not need to include the funding fee.
Costs Unique to VA Loans
VA charges a funding fee to complete a VA loan. This fee varies from 0% of the loan amount (for disabled veterans), to 3% (for multiple entitlement users for purchase or cash out refinance). The funding fee may change if you put some money into the purchase transaction (5% or 10%), or be a very small amount (.5% for interest rate reduction refinances). The rules for how the funding fee applies, and how much it is are too complicated to review in detail here. Please talk with your mortgage consultant to understand what your funding fee will be.
Eligible Property
As a rule, you can follow FHA's guidelines for eligible property. Check the VA's web site for condo and townhome approvals. You can also look at a complete list of VA minimum property requirements.
Refinance: For more information about refinancing a VA mortgage.
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