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VA
Made Easy
Everything  You  Need to  Know Class Presented
on 03-27-09 
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Presented ByBill Ladewig866.204.9733Bill_at_YourF
haGuru.comHttp//www.YourFhaGuru.com
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VA was established in 1945And, along with FHA,
VA is responsiblefor the high percentage of
American Home Ownership.
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VA Directs Lenders to Seek Common Sense Ways to
Approve Veteran Borrowers
Quoted From VA Underwriting GuidelinesThis
topic in the VA Lender's Handbook is intended
to encourage underwriters to find ways to approve
loan applications which ought to be approved but
may not appear approvable upon direct application
of the credit standards.
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The first Question Most buyers should be
askedHave You or Your Spouse served in the
Armed Services?
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Benefits of A VA  Loan 

• No Down Payment, 100 Financing.
• No Monthly Mortgage Insurance Premiums.
• Leniency on Credit and Employment history.
• No Reserve Requirements (1 unit only).
• Seller can pay all Closing Costs
• Seller can pay off debt for borrower.
• 100 Gift Funds allowed.
• 100 Cash-Out Refinance.
• VA Loans do not take longer to close than other
  loan types.

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VA  Funding  Fee 
The Funding Fee is a charge to Veterans for
the VA to Guarantee 25 of the VA loan to the
lender.

• The Funding Fee percentage is calculated on the
  loan amount.
• The VAFF is typically financed in the loan but
  can be paid in cash by Buyer or Seller.
• The following Veterans are exempt from paying the
  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 retirement pay.
• Surviving spouses of Veterans who died in service
  or from service related disabilities.

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VA  Funding  Fee 
Veteran
1 st  Time  Use 
Down Pmt 
2 nd    Use 
Purchase and Construction Loans 
None 
2.15
3.30
Regular Military 
5 to  10 
1.50
1.50
10 or  more 
1.25
1.25
Reserves /
None 
2.4
3.3
5 to  10 
1.75
1.75
National Guard 
10 or  more 
1.5
1.5
Cash Out Refinancing Loans 
N/A 
2.15
3.3
Regular Military 
Reserves /
N/A 
2.4
3.3
National Guard 
0.5
Interest Rate Reduction Refinance
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Borrower  Eligibility 
n Eligible borrower is a Veteran who

• Served with acceptable character of service, or
• Is the unmarried spouse of a deceased Veteran who
  died while in service or of service connected
  issues.
• Two unrelated VA eligible borrowers can purchase
  together.
• Only the spouse of Veteran is eligible to
  coborrow with the Veteran on a VA home loan.
• No other non-veteran person may coborrow, i.e.
  brother, sister, parent, aunt, uncle, significant
  other, etc.

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Borrower  Eligibility 
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Maximum  Loan  Amounts 

• Maximum 100 Loan Amounts vary in each county
  up to 1,094,625 in some California Counties.
• Maximum Loan includes VA Funding Fee.
• Loans are available above the maximum allowable
  VA loan up to 1,000,000. (subject to lender
  guidelines)
• Veteran must pay 25 down on balance over
  maximum allowable VA loan amount.
• Example 650,000 Purchase San Diego.
• Maximum VA loan is 593,750.
• 650,000 593,750 56,250.
• 56,250 X 25 14,062 Down or 2
• VA Funding Fee must be paid cash when loan
  is above VA maximum.
• Maximum VA loans can be found at
• http//www.homeloans.va.gov/docs/2009_county_loa
  n_limits.pdf

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Refinance
CashOut Or, Rate Term Refinance
100 of Appraised Value

• Plus
• The cost of energy efficiency improvements up to
  6,000,
• VA funding fee.

Eligible veterans can use a VA loan to refinance
other loan types.
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Streamline Refinance

• Used to refinance an existing VA loan to a lower
  interest rate or improve loan terms.
• No appraisal or underwriting is required.
• Closing costs may be financed in the loan.
• Any reasonable discount points can be charged,
  but only 2 discount points can be financed in the
  loan.
• No cash to the borrower.
• Note A fixed rate loan to refinance a VA
  ARM may be at a higher interest rate.

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  VA Loan Types

• 15 Year Fixed
• 30 Year Fixed
• 2/1 Buydown (Qualify at Note Rate)
• 1/1 ARM, 3/1 ARM and 5/1 ARM

• Caps 1 Initial, 1 Periodic and 5 Lifetime
• Index 1 Year US Treasury
• Margin Set by Lender

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Occupancy 
n Owner Occupied only, except

• VA Streamline Refinance, Veteran does not need to
  currently occupy the property, but must have
  occupied the property in the past.

n Occupancy by Veterans spouse in the case when
a Veteran is stationed in a distant location
satisfies the occupancy requirement.
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Entitlement and Certificate  of  Eligibility 
n A COE does not expire. It can be reused again
and again if it is properly restored.
n If a Veteran holds a valid COE, you can
assume she/he has appropriate length and
character of service. Sometimes, the COE is
annotated for individuals currently servicing in
active duty.
n It is possible for the Certificate of
Eligibility to show an amount that is less than
36,000. In these cases, refer to the VA Lender
Handbook, Chapter 2, for more details on this
issue.
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Verification  of  VA  Benefits 
n Ask the veteran and applicable coborrowers
if he or she
1. Is receiving VA disability benefits
2. Would be entitled to receive VA disability,
but for the receipt of retired pay.
3. Has received VA disability benefits in the
past, or 4. Is a surviving spouse of a veteran
who died while on active duty or as a result of a
serviceconnected disability.
If the answer is yes to one of the above
questions, please submit the form for completion
to
U.S. Department of Veterans Affairs Phoenix
Regional Loan Center 3333 North Central Avenue
Phoenix, Arizona 85012
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CAIVRS 
n CAIVRS (Credit Alert Interactive Voice
Response System) is a HUD system to determine if
the borrower has defaulted on any federally
assisted loan.

• A CAIVRS inquiry must be performed on all
  borrowers.
• HUD offers online access for CAIVRS to current
  FHA lenders, and to VA lenders with registration.
  https//vip.vba.va.gov (Veterans Information
  Portal).

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Property  Eligibility 

• SFR, Condo, PUD, 14 Units.
• Units 2-4 require 6 months reserves.
• Manufactured Homes Check with lender.
• Condos must be on the VA approved condo list
  before any unit in the project can be eligible
  for VA loan guaranty.
• Condo Lookup http//condopudbuilder.vba.va.gov/2.
  2/frames.html

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Allowable  Closing  Costs 
n The Veteran can pay

• Appraisal,
• Recording,
• Credit report,
• Origination Fee (maximum 1)
• Reasonable discount points.
• Flood certificate.
• Prepaid items, taxes, assessments and
  insurance.
• Hazard Insurance Premium

• Veteran cannot pay
• Escrow or Settlement Fees
• Lender Fees (Doc, Admin etc.)
• Termite report and repairs,
• Notary fees.

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Cash  to  Close 

• Verify all liquid assets to the extent they are
  needed to close the loan. VODs two months bank
  statements, gift letters and receipt, etc.
• Reserves are not required on 1 unit but are
  helpful in determining overall credit analysis.
• VODs two months bank statements, gift letters

• Seller concessions are 4

n Seller may pay off debt for Veteran, provided
it is within the 4 maximum concession.
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Credit  History 

• VA Credit Guidelines are not score driven but
  lenders can impose their own guidelines.
• CAIVRs Inquiry is required on all borrowers.
• RMCR or MCR (3 files merged) reports are
  acceptable.
• Current Rent and/or Mortgage history.
• Absence of Credit History, use alternative credit
• Adverse credit history of nonpurchasing spouse
  is not considered against veteran. Monthly
  obligations are considered due to community
  property state. A credit report is required on
  all nonpurchasing spouses.
• Collections may not necessarily be required to be
  paid, upon review of explanation and any
  supporting documentation by borrower, this is
  considered on a case by case basis. Seller can
  pay collections.

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Credit  History  Continued 
n Judgments must be paid in full, or subject to
repayment plan with timely payments (12 months).

• Consumer Credit Counseling 1 year payments made
  with no with lates
• Bankruptcy discharged more than 2 years are
  disregarded. Less than 2 years, must have
  established new and positive credit with a length
  of timely payments (12 months), and the
  bankruptcy was caused by circumstances beyond the
  control of the borrower.

• 1 year into Chapter 13 pay out.
• Foreclosure or DeedinLieu, follow BK guidelines
  above.

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Debts  and  Obligations 

• Must verify alimony and child support.
• Student loans scheduled to begin within 12 months
  of the close of escrow will be counted.
• Loans secured by deposited funds are not counted.
• Underwriter Option Installment debts with less
  than 10 months remaining do not necessarily need
  to be included in credit qualifying. Large
  payments should be considered.

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Income  and  Employment 
n Wages require 2 year history, less than 2
years considered case by case.

• Overtime income and 2nd job income generally
  needs 2 year history, less than 2 years is
  considered case by case.
• Commission 2-year history, unless previous
  related employment or specialized training -
  1040s required.
• Self Employment averaged 24 months, 1040s
  required.
• Alimony and Child Support must be verified.
• Seasonal jobs and unemployment may be averaged
  with 24 month history of both.

n Other Income, pension, retirement, disability,
etc. must be verified.
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Income  and  Employment
n Active Military income - consider base pay as
stable reliable unless applicant is within 12
months of release of active duty. Leave and
Earnings Statement is required (LES). If
reenlisting, letter from commanding officer, or
if leaving military, job offer letter from new
employer.
n Military quarters allowance can be considered
income need form DD form 1747, status of
Housing Availability - non taxable.
n Other Military allowances - obtain
verification of type and amount and length of
receipt.
n Income from Reserves or National Guard can be
considered if the length of total service
indicates a strong probability of continuance.
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Ratios  and  Residual  Income 
n DTI - 41
n May exceed ratio if run through DU with
Approve/Eligible, or LP with, Accept.
n Additional, residual income (balance
available for family support) is calculated, with
a set guide for varying family sized, according
to regions across the country.
n When the DTI is gt 41, the residual income
should be at least 20 over the stated guideline.
Loans not meeting this, require strong
compensating factors.
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VA Residual  Income  Guideline 
Table  of  Residual  Income  by  Region
Loan  Amounts  of  80,000  and  Above 
Family 
N  East 
Midwest 
South 
West 
Size 
1
450
441
441
491
2
755
738
738
823
3
909
889
889
990
4
1025
1003
1003
1117
5
1062
1039
1039
1158
Over  5 
Add  80  for  each  addl.  member  up  to  (7) 
When DTI exceeds 41 multiply required reserve by
120
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Income  Tax  Deductions 
n Determine the appropriate deductions for
Federal income tax and Social Security/Medicare
by using Employers Tax Guide charts.

• Determine the appropriate deductions for state
  and local taxes using California Withholding
  charts, or applicable state materials.
• State and Federal taxes at PaycheckCity.com
• http//www.paycheckcity.com/netpaycalc/netpa
  ycalculator.asp

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Income Qualification 
Family of 4 Gross Monthly Family Income
6,000
Housing Expense (P.I.T.I) CA State Federal
Withholding Maintenance and Utilities Monthly
Obligations Total Family Expenses Monthly
Residual Income Required Residual Income (From
Chart) DTI 44.54 Rule when DTI gt41 actual
residual income must be 120 of minimum required
residual 1,117 X 120 1,304 lt 1,613 OK
2,172 1,435 280 500 4,387 1,613 1,117

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Compensating  Factors 
n Compensating factors include, but are not
limited to

• Excellent credit history.
• Conservative use of consumer credit.
• Minimal consumer debt.
• Long-term employment.
• Significant liquid assets.
• Sizable down payment
• Little or no increase in shelter expense.
• High residual income.
• Low debttoincome ratio.

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Thank You for Attending
Your questions and comments on this class
are appreciated. Current updates are at
http//www.YourFhaGuru.com

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