VA LOAN NUANCES

The VA loan program seems to come with a number of misconceptions that I’ll try to clear up below.

Q: Are my GI Bill benefits used as qualifying income?

A: No. VA does not see VA educational allowances as a permanent source of income, therefore, it is disallowed.

 

Q: Why will you not use my active duty pay while I’m still in the military?

A: Just as with the GI Bill income, VA does not see your income as a permanent source when you have less than 12 months left in the military. Thus, we have to use either your VA retirement/disability income or the offer letter on the job you’ll be going to after your discharge. If you won’t be receiving any VA benefits and do not have a job lined up, you’ll need to wait until you do.

 

Q: My parents are willing to co-sign for me. Why won’t you allow that?

A: VA does not allow for non-owner occupants or co-signers.

 

Q: I co-signed for my son’s car. Do we need to count that payment since he makes all of the payments?

A: No. As long as we can document that your son has been making the payments and there is no reason to assume you’ll need to, we can exclude that payment from your debt to income ratio.

 

Q: Must I pay off my federal tax debt prior to purchasing?

A: No. As long as you can document that you have a payment agreement and are making timely payments and you qualify with these payments in your debt to income ratio, the tax bill does not need to be paid off.

 

Q: Can the Seller pay my closing costs?

A: Yes. The Seller can pay up to 4% of the sales price towards your closing costs, prepaids and buy-downs plus an additional 4% towards debt payoff or sales concessions for a total of 8% participation by the Seller.

 

Q: I have already used my VA eligibility once. Can I use it again?

A: Yes, you can use it as many times as you wish as long as you have enough eligibility left to do so based on selling and paying off prior VA loans.

 

Q: Can I have more than one VA loan at a time?

A: Yes, as long as you have adequate guaranty so this works for several small VA loans versus one large one, typically.

 

Q: I’ve been told that there are a number of non-allowable fees that a Veteran can be charged on their loan, yet I’m seeing all of those same fees on my loan estimate. Is this allowed?

A: As long as the total of these fees is less than 1% of the loan amount, then yes, the Veteran can pay the fees.

 

Q: Do I have to pay a VA funding fee every time I use my VA eligibility?

A: It depends. If you have a 10% or greater VA disability rating, then no, you’ll never have to pay a VA funding fee regardless of the number of VA loans you have. If you do not have a VA disability rating, then yes, you will.

 

Q: I had my prior home foreclosed; how long do I need to wait before I can use my VA eligibility to purchase another home?

A: You must wait two (2) years or one (1) year with extenuating circumstances. If the foreclosure was included in a bankruptcy, then we follow the bankruptcy guidelines for VA.

 

Q: How long must I wait after a bankruptcy to do a VA loan?

A: Two (2) years from the discharge date on a Chapter 7 or one (1) year if there were extenuating circumstances. And you can be 12 months into paying on time for a Chapter 13 with the permission of the court to take on new debt.

 

Q: My dad was in the Marines. Does that qualify me for a VA loan?

A: No.

 

If you have other VA questions, give me a call at 360-459-1200 or send me an email at michelle.wickett@axiahomeloans.com.

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