VA Loans

What is a VA loan?

As the name implies, it is a loan for Veterans with active duty service, that was not dishonorable, during World War II and later periods. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days of active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years. These loans are often made without any downpayment at all. Aside from the veteran's certificate of eligibility and the fact that the appraiser is assigned by VA, the application process is not much different than any other type of mortgage loan.

Steps to a VA Loan

1. Apply for a Certificate of Eligibility (COE)

To get your Certificate of Eligibility (COE) online, please go to the eBenefits portal at If you need any assistance please call the eBenefits Help Desk at 1-800-983-0937. Their hours are Monday-Friday, 8am to 8pm EST.

Alternatively, Veterans can obtain their COE by completing VA Form 26-1880, request for a Certificate of Eligibility, and mailing it, along with proof of military service, to the Eligibility Center (you will find the Eligibility Center’s address on VA Form 26-1880). Also, Veterans who have already begun the loan application process with a lender may request the lender’s assistance obtaining a COE.

2. Decide on a home to buy and sign a purchase agreement.

3. Order an appraisal from VA. (Usually this is done by the lender.)

Ordering an appraisal can be done via the Internet using TAS (The Appraisal System). This is a centralized system that allows lenders easy and quick access to order an appraisal.

4. Apply to a mortgage lender for the loan.

While the appraisal is being done, the lender can be gathering credit and income information. If the lender is authorized by VA to process loans on the automatic basis (and approx. 99 percent of all VA loans are processed this way), the loan can be approved and closed upon receipt of the appraised value determination without waiting for a VA review of the credit application. VA has also approved the use of several automated underwriting systems for lenders to use in connection with VA loans. The two main systems are Loan Prospector and Desktop Underwriter. For loans that must be approved by VA, lenders send the credit package to VA. VA staff will then review it and notify the lender of the decision.

5. Close the loan and move in.

Advantages of VA home Loans:

Most important consideration, no downpayment is required in most cases.

Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Due to secondary market requirements, however, loans generally may not exceed $417,000 ($625,500 for loans in Hawaii, Alaska, Guam and U.S., Virgin Islands). This figure is subject to change each year.

    1. Flexibility of negotiating interest rates with the lender.

    2. No monthly mortgage insurance premium to pay.

    3. Limitation on buyer's closing costs.

    4. An appraisal, which informs the buyer of estimated property value.

    5. Thirty-year loans with a choice of repayment plans.

What Can a VA Loan be used for?

    1. To buy a home, a condominium unit in a VA-approved project, or to purchase a unit in a cooperative (co-op).

    2. To build a home.

    3. To simultaneously purchase and improve a home.

    4. To improve a home by installing energy-related features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors, or other energy efficient improvements approved by the lender and VA. These features may be added to the purchase of an existing dwelling or by refinancing a home owned and occupied by the veteran. A loan can be increased up to $3,000 based on documented costs or up to $6,000 if the increase in the mortgage payment is offset by the expected reduction in utility costs. A refinancing loan may not exceed 90 percent of the appraised value plus the costs of the improvements. Check with a lender or VA for details.

    5. To refinance an existing home loan up to 90 percent of the VA-established reasonable value or to refinance an existing VA loan to reduce the interest rate.

    6. To buy a manufactured home and/or lot.