VA Loan Entitlement & Eligibility
Written by guest blogger H.C. "Hutch" Hutchison, Ed.D.
The VA Loan Entitlement is the basic amount for which the Veteran’s Administration will insure or guarantee a loan. The loan entitlement is based on an applicant’s income.
The VA Guaranty Amount varies with the size of the loan and the property location with the VA guaranteeing 25 percent of the principal amount, up to the maximum guaranty. For the United States (excluding Alaska, Hawaii, Guam and the U.S. Virgin Islands) the guaranty amount is the greater of 25% of $417,000 or 125% of the area median price of a single family residence. It's a good idea to check with a lender for current figures. However, the guaranty amount cannot exceed 175% of the Freddie Mac limit for a loan on a single-family residence in the county where the property is located. In 2009 the maximum loan amount was $1,094,625.
The initial step in purchasing a home using a VA loan entitlement is to obtain a Certificate of Eligibility (COE), a VA-provided document that certifies your eligibility for a VA home loan guaranty. There are two ways to obtain a Certificate of Eligibility: online or by mail.
Online:
You can obtain a COE online by first registering at the Veterans Information Portal. There are instructions for applying for your COE online, but the process can be daunting if you aren’t familiar with all the jargon. However, try WebLGY first because approximately 56% of attempts result in an immediate COE. If you find the Internet a little overwhelming, then I recommend working with a lender that has access to the VA’s WebLGY system. A lender can help walk you through the process and may be able to issue your COE in minutes. A quick call to a lender can tell you if that lender has access to “WebLGY.”
As you shop for a loan, don’t limit yourself to just one lender. Visit three or more and let each lender know you are “shopping,” because competition can result in offers of more competitive loan packages.
By Mail:
Sometimes the VA does not have sufficient data in its online records. In that case, you must apply for the COE by mail. A veteran can obtain a COE by completing VA Form 26-1880, Request for a Certificate of Eligibility, and mailing the form to: VA Eligibility Center, P.O. Box 20729, Winston-Salem, NC 27120. Just remember, you are dealing with the VA. It may take time for the VA representative to receive, process and then approve (or reject) your request and then return the COE to you.
Once you receive your COE, you have completed Step 1 of the 7-step process to purchasing a home. Step 2 is finding a home you wish to purchase. We will look at that step in the next blog entry.
H.C. “Hutch” Hutchison, Ed.D., retired from the U.S. Army in 1991, after more than twenty-two years of active duty. Since then, the former helicopter test pilot and aviation maintenance officer has earned his third post-graduate degree and taught under-graduate and graduate courses. In addition to practicing real estate with Coldwell Banker Sea Coast Realty, Hutchison is active in national, state, and local leadership organizations and local chapters of the Vietnam Veterans of America, Veterans of Modern Warfare, Disabled American Veterans, Veterans of Foreign Wars, and United States Army Warrant Officer Association.
The VA Loan Entitlement is the basic amount for which the Veteran’s Administration will insure or guarantee a loan. The loan entitlement is based on an applicant’s income.
The VA Guaranty Amount varies with the size of the loan and the property location with the VA guaranteeing 25 percent of the principal amount, up to the maximum guaranty. For the United States (excluding Alaska, Hawaii, Guam and the U.S. Virgin Islands) the guaranty amount is the greater of 25% of $417,000 or 125% of the area median price of a single family residence. It's a good idea to check with a lender for current figures. However, the guaranty amount cannot exceed 175% of the Freddie Mac limit for a loan on a single-family residence in the county where the property is located. In 2009 the maximum loan amount was $1,094,625.
The initial step in purchasing a home using a VA loan entitlement is to obtain a Certificate of Eligibility (COE), a VA-provided document that certifies your eligibility for a VA home loan guaranty. There are two ways to obtain a Certificate of Eligibility: online or by mail.
Online:
You can obtain a COE online by first registering at the Veterans Information Portal. There are instructions for applying for your COE online, but the process can be daunting if you aren’t familiar with all the jargon. However, try WebLGY first because approximately 56% of attempts result in an immediate COE. If you find the Internet a little overwhelming, then I recommend working with a lender that has access to the VA’s WebLGY system. A lender can help walk you through the process and may be able to issue your COE in minutes. A quick call to a lender can tell you if that lender has access to “WebLGY.”
As you shop for a loan, don’t limit yourself to just one lender. Visit three or more and let each lender know you are “shopping,” because competition can result in offers of more competitive loan packages.
By Mail:
Sometimes the VA does not have sufficient data in its online records. In that case, you must apply for the COE by mail. A veteran can obtain a COE by completing VA Form 26-1880, Request for a Certificate of Eligibility, and mailing the form to: VA Eligibility Center, P.O. Box 20729, Winston-Salem, NC 27120. Just remember, you are dealing with the VA. It may take time for the VA representative to receive, process and then approve (or reject) your request and then return the COE to you.
Once you receive your COE, you have completed Step 1 of the 7-step process to purchasing a home. Step 2 is finding a home you wish to purchase. We will look at that step in the next blog entry.
H.C. “Hutch” Hutchison, Ed.D., retired from the U.S. Army in 1991, after more than twenty-two years of active duty. Since then, the former helicopter test pilot and aviation maintenance officer has earned his third post-graduate degree and taught under-graduate and graduate courses. In addition to practicing real estate with Coldwell Banker Sea Coast Realty, Hutchison is active in national, state, and local leadership organizations and local chapters of the Vietnam Veterans of America, Veterans of Modern Warfare, Disabled American Veterans, Veterans of Foreign Wars, and United States Army Warrant Officer Association.
Labels: Certificate of Eligibility, coldwell banker, coldwell banker sea coast realty, Hutch Hutchison, sea coast realty, VA Guaranty, VA loan, VA Loan Entitlement, veteran
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