Credit: Veterans must verify two years of
satisfactory credit history. However, the VA is very liberal on the point
and will usually allow a veteran who has not established credit to
indicate by letter that he prefers the use of cash.
Employment: A veteran must be able to verify two years of
satisfactory employment. If he was in the service or in school, that time
will normally count toward the requirement.
Bankruptcy: The VA will generally disregard bankruptcy after 5
years if credit has been re-established. If the bankruptcy occurred less
than 5 years ago and the veteran had a reason which was beyond his
control, then they will consider each case individually. If the bankruptcy
was discharged less than two years ago, the time frame is not considered
to be long enough to re-establish a credit standing.
Monthly Debt Payment: The VA may count all monthly obligations
against the buyer, but if they are less than 6 months they might not count
against the applicant. Also, the VA uses only the minimum monthly payment
required on revolving accounts.
Cash Required: A veteran must be able to verify that he has enough
cash to pay any down payment and closing costs before being submitted for
VA approval. The seller may pay all of the veteran's closing costs and
prepaids. (Limited to 4% of appraisal in some areas.) Therefore, it is
possible for a veteran to buy a home with almost no cash required.
Gift Letters: Gift letters from relatives are acceptable, but they
must state what the gift is intended for, the amount, the donor's
relationship tot he veteran and that the money is a gift and need not be
repaid.
Child Support: Child support received by the veteran or veteran's
spouse will usually count toward income, but it is necessary to prove
receipt of this income (payment thought he court or cancelled checks).
Rental Income: Rental income may count if the buyer has a lease
agreement or a statement from a tenant verifying the payment. Caution:
Figure only 80% of net rental income since VA makes allowances for
vacancy, taxes and maintenance.
Co-Borrowers: Two veterans may purchase a home together and the
eligibility could be split between them or all of the one veteran's
eligibility could be used if preferred. Both incomes would count toward
qualification in these cases. A veteran and a non-veteran may purchase
together on a VA loan but the loan guarantee to the lender would be
reduced, as the VA will not guarantee the non-veteran's share of the loan.
Caution: In most cases the lender will not make this type of loan because
they are unable to sell such a loan to investors due to the decreased loan
guarantee. Some VA offices allow co-signer but the co co-signer must be
very well qualified and they would not have any ownership, only liability.
Units & Acreage: One to four family unit structures are acceptable
as long as they are attached and the veteran occupies one of the units.
Any amount of acreage is allowed and farms are eligible if the veteran
intends to occupy the house on the farm.
Specifications: Property should have modern plumbing, electrical
and heating system. Homes near commercial property, railroads,
incinerators or airports may be excluded. The VA does not usually make too
many requirements unless the structure is unsound or there is an obvious
danger or hazard such as inadequate foundation, roof or furnace. They
require health authority approval of septic systems and a termite
inspection. If the Vet accepts responsibility the VA will occasionally
waive some repair requirements.
Appraisals: VA appraisals are good for 6 months, no extension is
allowed. If a contract is dated prior to the expiration date of the
appraisal the VA will still honor it.
