VA Lenders Handbook | PDF | RTF | Word
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To help veterans and active military members buy houses, the VA guarantees loans to eligible veterans or their spouses when they cannot obtain private loans. The VA Lenders Handbook goes into detail about all of the issues involved with obtaining a loan through the VA.
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Loans through the VA offer borrowers a number of advantages, including no down payment, competitive loan rates, and no need for private insurance. With over 20 million loans provided to veterans since the program’s start in 1944, it has been a great help for the high rate of veterans who cannot obtain private home financing, and it has helped propel the housing market too.
Getting a home loan can be confusing, but the VA Lenders Handbook explains each aspect of the process in detail. For obtaining a VA loan, there are five general steps:
- Prequalification
- Preapproval
- Finding a home
- Making an offer
- Processing and closing
Using the VA Lenders Handbook
The handbook goes into great detail on the technical and financial requirements to complete the process, generally in accordance with the law that created the program and its subsequent regulations. Among 18 chapters in the handbook, some of the topics include:
- The Lender: explains how to obtain VA-approved lender status
- VA Loan and Guaranty: covers elements of loans, interest rates, amortization, and related issues
- Property Eligibility: describes the appraisal system and eligible properties
- Minimum Property Requirements: covers the building codes and federal regulations that properties must adhere to to qualify for a loan
Lender Eligibility
This section should let you know your eligibility for a VA loan. Depending on whether you’re a veteran, currently on active duty, or in the National Guard, your eligibility will be based on the number of days you have actively served, the time period, and the engagement you served in. Veterans generally must have participated in any of the major campaigns of the 20th century (e.g., Vietnam, Gulf War), for either 90 total days, 181 continuous days, or 24 continuous months.
Property Eligibility
VA-backed properties typically must be owner occupied, meaning the borrower can’t take out a mortgage on a property with the intent to rent it out. Generally, single-family homes, multi-family homes, condominiums, and townhouses may be approved. Properties must be used primarily for residential purposes (rather than business purposes), and they must meet habitability requirements, among others.
Credit
Borrowers must also pass a credit check and have sufficient future income to satisfy the loan requirements. This requires lenders to verify all sources of the borrower’s income, any debts, and then judge whether the income can meet the loan payments, in addition to other living expenses, and whether the income is reliable and expected to continue. Lenders usually verify two years of continued employment, obtain pay stubs, and use W-2s to make these decisions. Generally, employment under 12 months in length is not considered stable.
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