Orange County FHA, VA & First Time Buyer Loan Information: How to Restore VA Loan Eligibility

My goal is to provide valuable information for home buyers, both First Time Buyers and Move Up Buyers. This information will be about loan programs such as FHA ,VA, Conventional Fannie Mae and Freddie Mac, Reverse Mortgages, and even Portfolio Jumbo programs. I will also touch on tax advantages of homeownership, Rent vs. Own analysis, and any other aspect of loans and home ownership that will be of interest to Orange County home buyers and homeowners.

How to Restore VA Loan Eligibility

va entitlement restorationThe VA loan program is a great way for a Veteran to buy a home in Orange County, since it allows for 100% financing and has no mortgage insurance. But what many don't realize is that it can be used more than once. As a matter of fact, there is not a limit to how many times it can be used. What is more important is whether a Veterans previous VA loan has been paid off or not and what the final disposition of that property was.

Can a Veteran have more than one VA Loan at the same time?

Yes, a Veteran can have more than one VA loan at the same time. Recently I had a client who moved from Colorado to Orange County, CA. In 2011 while in Colorado they had used their VA eligibility to purchase a home for $238,800 with no down payment. Because of a job transfer they were moving to California but did not want to sell their Colorado home. We retrieved an updated Certificate of Eligiblity which showed their VA Entitlement had been charged $59,700 from the Colorado loan.  Essentially, 25% of the purchase price since their Colorado loan was $0 down. In Orange County the $0 down loan limit is $687,500 (in 2014). To buy at that price a Veteran needs to have 100% of their Entitlement intact. Since my Colorado Veteran had only a portion of their Entitlement available we needed to do some calculating. By using the VA Maximum Loan Worksheet we were able to determine that as long as the Orange County home purchase price was $448,700 or less then a down payment would not be required.

Restoring Entitlement Quickly

What would have happened if my client had decided they would sell their Colorado home in order to free up 100% of their VA Entitlement? It is possible to do a concurrent closing and get a quick Entitlement restoration. The moment the Colorado property closes escrow, the lender on the new purchase sends a VA Form 26-1880 into VA, along with the certified Final Closing Statement. It can sometimes take a couple of days, but the process is surprisingly easy.

The bottom line is that the VA loan program is awesome. It can be used more than once, you can have more than one VA loan at a time, there is no down payment required and there is no monthly mortgage insurance. But it is important to work with a VA Loan Specialist, especially in situations involving multiple VA loans or restoring entitlement. The VA loan officer should be able to provide custom loan scenarios with details on the purchase price, loan amount, and payment.

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at Fairway Indpendent Mortgage Corporation. Direct line at 949-640-3102.

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Comment balloon 0 commentsTim Storm • May 08 2014 10:38AM