The VA Loan Program

Dispelling Myths and Misconceptions

Charlie and I recently went through a training put on by the Veterans Association of Real Estate Professionals to obtain our Military Veteran Housing Certification (MVHC) designation. In this post I hope to dispel some myths and confusion regarding the VA loan benefit program and its origin, intention, and uses.

In 2010 the results from the National Veterans Survey revealed that 33.6% of Veteran respondents did not know about the VA home loan program, and 8.1% of VA eligible loan seekers had a REALTOR who discouraged the use of the VA home loan. I believe these statistics are a good representation of the population, as Charlie and I faced the same confusion and push back ourselves when we were seeking financing for a new home many years ago.

A brief history of the VA loan:

The VA home loan program was a part of the Serviceman’s Readjustment Act of 1944, which aimed to help Veterans buy homes when returning home after WWII. The program was conceived as a good alternative to a simple cash payment, as it would save the government money and better serve the needs of Veterans. As of 2017 there were over 740,000 funded VA loans totaling over 188 billion dollars in benefits!

What is a VA loan?

A common misconception is that the VA is a bank, and that the VA actually loans the money for and services the VA loan. The reality is, the VA simply guarantees the loan. The VA’s guarantee takes the place of the protection offered when a borrower puts a down payment or purchases mortgage insurance for a typical home loan. Most VA loans are handled by private institutions, and the VA simply provides the ability for the Veteran to obtain favorable financing options by guaranteeing the lending institution is protected from any future losses.

The loan is good for residences that will be purchased or constructed to be occupied by the Veteran, their spouse, or dependent children. Under some circumstances, condos and multifamily residences may qualify for purchase with VA loan benefits. You can find a list of eligible condos in your area here: Veterans Information Portal Condo Report. Or, find out more about VA multifamily eligibility here. The benefit may be used many times, and under certain circumstances an eligible Veteran may have more than one VA loan outstanding at any one time, on multiple residences.

How to find out if you qualify

It is vital to allow the VA to make the determination if the Veteran is eligible for a VA loan benefit. This is not a determination that should be made by a lender. Veterans should obtain a Certificate of Eligibility (COE) form 26-1880 directly from the VA. The COE is the official document that certifies if the Veteran is eligible for the VA benefit, and will indicate the entitlement, or amount the VA will guarantee on a loan, for each individual. The COE can be ordered by the lender online and is available within minutes. if the lender is not able to pull up the COE online it does not necessarily mean the Veteran is ineligible for VA loan benefits, it simply means the system does not have enough information to make that determination at that time.

Once eligibility has been determined, the Veteran is subject to lender determined criteria, called overlays, to determine if and for how much they qualify to borrow through that particular lender. The VA does not set these requirements. The overlays may include but are not limited to; credit score requirements, debt to income ratio, and consideration regarding the handling of collection accounts and bankruptcies. As overlays vary from lender to lender, it is advisable to consult with more than one lender when shopping for a loan to guarantee the Veteran selects the best option for their circumstances.

Allowable and non-allowable Fees

Once eligibility and lender qualification have been determined, there are certain closing costs and fees that must be considered and planned for accordingly to meet VA funding requirements. There is a maximum allowable amount of fees that the Veteran/buyer can pay for. If the seller, agents, or lending institution will not incur the remaining costs, the loan will not be funded. There is a list of reasonable fees the Veteran may pay for, which include appraisal and compliance inspections, title related fees and the VA funding fees, among others. The full list of allowable and non-allowable fees can be found in the VA Policy on Fees and Charges Paid by the Veteran-Borrower.

The VA appraisal and minimum property requirements

The minimum property requirements (MPR) for a VA loan ensures that the home is built to applicable local building codes and that it meets HUD and Federal building requirements and regulations. MPRs ensure the home is safe, structurally sound, and sanitary, and meets the acceptable standards of a home in its particular locality. The VA appraisal involves examining the home for potential safety issues, structural weaknesses, and any sanitation concerns, such as the presence of pests.

The appraisal and MPRs, in our experience, are where seller and agent concerns focus when it comes to considering an offer contingent on a VA loan. In reality, if the house being pursued by the Veteran is in safe, structurally sound and sanitary condition, there is little to fear about the VA loan. The loans can close as quickly as a conventional or FHA loan, and are often less expensive for the buyer. Many underwriting accommodations can be made for Veterans buying or refinancing with a VA loan, which makes them easier to qualify for. In some cases VA loans can be used to finance up to 100% of a home’s value, which can greatly expand a seller’s buyer pool.

As always, it is vital you consult with a lending professional for any specific questions regarding your personal financial situation. If you would like help finding a qualified lending professional to facilitate the use of your VA loan benefits, or contact us any time.

Additionally, you can click here to find out about our real estate services, and learn how working with us will support what we are doing to benefit our local Veteran population.

Current Housing Options for Homeless Veterans in Reno are Dwindling

While I am a huge proponent of all qualified home buyers taking the steps necessary to make home-ownership their reality, owning a house is not for everyone and not all buyers are qualified. 

The Housing and Urban Development Veterans Affairs Supportive Housing (HUD-VASH) program provides rental assistance for homeless Veterans by providing them with a Housing Choice Voucher (HCV,) which is the terminology used to indicate payment being made to the beneficiary’s landlord by HUD.  To qualify for an HCV, the Veteran must receive case management and clinical services, provided by the Department of Veterans Affairs (VA).  The VA provides these services for participating Veterans at VA Medical Centers and community-based outreach clinics.

What I like most about the HUD-VASH program is they are guided by the idea that housing comes first.

What that means is when a qualified Veteran presents as homeless at a shelter, to law enforcement, at the VA Medical Center or elsewhere, the first priority is getting the Veteran a home and a case worker to get them back on track to self-sufficiency.  It is believed that self sufficiency is more likely to happen when an individual has a stable home.

HUD-VASH vouchers in Washoe County are administered by the Reno Housing Authority Vouchers are awarded to the Reno Housing Authority based on geographic need and the Authority’s administrative performance.  The data used to determine the number of vouchers delegated to an area are: HUD’s point-in-time data submitted by Continuums of Care (CoCs), VA Medical Center data on the number of contacts with homeless Veterans, and performance data from the Reno Housing Authority and VA Medical Center.  After determining the number of homeless Veterans, the VA Central Office identifies VA facilities in the corresponding communities.  HUD then invites the Reno Housing Authority to apply for the vouchers.  

As of today’s writing, there is an allocation of 330 HUD-VASH vouchers for Washoe County, administrated by the Reno Housing Authority, and another 100 vouchers for areas outside of Washoe County, which are managed by Nevada Rural Housing authority. The problem faced by the RHA is a shortage of landlords who are willing to participate in the program for a myriad of reasons.  With rents rising in Washoe County it is hard for HUD to stay competitive with their voucher rates. This market change has led some participating landlords to drop the program in favor of potentially higher rental income.  Additionally, the homeless Veteran population can be a difficult clientele to manage.  Mental health challenges can lead to an unfavorable reaction from landlords, and physical health challenges make convenient access to public transportation and health care vitally important to this population. 

Many of the properties that would be ideal locations to house Veterans in the Reno area have been bought by developers, only to be torn down or boarded up and used as a tax write off for investors.

The need for participating landlords is why I have made it a personal priority to provide units for the HUD-VASH program.  I am of the opinion that everyone deserves a dignified, safe, and comfortable place to call home.  If you would like to know more about this program, or our efforts to support the program, get in touch via my Contact Page any time.

Today is National PTSD Awareness Day

Post-traumatic Stress Disorder, or PTSD, is a psychological reaction to traumatic events that can be experienced by anyone who has been exposed to a life-threatening, violent, or dangerous situation. Common sufferers include combat Veterans and First Responders, who respond to help victims of traumatic events.

According to the Veterans Administration, PTSD is the leading contributing factor to nearly 40,000 American Veterans being without a roof over their heads.

PTSD is also a major contributing factor in suicides and substance abuse. VA statistics indicate that PTSD impacts 11% to 20% of Iraq and Afghanistan War Veterans, approximately 12% of Gulf War Veterans, and 15% of Vietnam Veterans.  In recent years there has been an increase in the number of homeless women who suffer from service related PTSD, whom are often accompanied in homelessness by their children.

It was not until the Forgotten Warrior Project in the 1970s that effort was directed into the identification and treatment of these invisible wounds.  For decades, PTSD was referred to as “shell shock” or “battle fatigue” and was dismissed as general anxiety.  The data from the Forgotten Warrior Project was crucial to the ultimate adoption of PTSD into the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders in 1980.

The growing acceptance and recognition of PTSD as a clinical diagnosis has led to many resources, including the VA’s Readjustment Counseling Service, for Veterans who suffer from PTSD and other service related mental health issues and traumas.

Additional resources for individuals suffering from service related traumas include:

The National Coalition for Homeless Veterans – a resource that provides emergency and supportive housing, food, health services, legal aid and case management support for homeless veterans

The National Alliance to End Homelessness – a non-partisan organization committed to preventing and ending homelessness which has an array of policy, data and program resources related to homelessness among veterans.

and The Disabled American Veteran’s Charitable Service Trust – an organization that promotes the development of supportive housing and necessary services to assist homeless Veterans to become productive, self-sufficient members of society.

If you encounter a homeless Veteran, or any other individual that you think may be affected by PTSD please, let them know that there is help, and guide them to the resources they may need.

For immediate help, call The National Suicide Prevention Lifeline: 1-800-273-8255

Veterans Crisis Line: 1-800-273-8255, press “1”

Don’t Let the Term ‘Rural’ Fool You When it Comes to Home Buyer Assistance

Alleviating the affordable housing problem in the greater Reno Metro area starts with getting qualified buyers into home ownership and out of high priced rentals.  Lowering the demand for rentals will drive prices down and make it easier for those with fewer monetary resources to find homes. In my last post, Down Payment Assistance May Be Right At Your Fingertips, I provided details of some of the programs offered by the Nevada Housing Division. Today I hope to dispel some confusion surrounding another program available to Nevadans, Home At Last™

The Nevada Rural Housing Authority (NRHA) offers a program, Home at Last™ Down Payment Assistance, that can help home buying hopefuls with up to $24,000 in down payment assistance.  

The Nevada Rural Housing Authority (NRHA) offers a program, Home at Last™ Down Payment Assistance, that can help home buying hopefuls with up to $24,000 in down payment assistance.  

The term “Rural” often leads people to believe they will not be able to take advantage of the assistance if they want to live in their preferred area, but you may be surprised to find out that an area of interest to you actually does qualify.  People are often surprised to find out that areas such as Sparks, Carson City, and Fernley qualify.  To check an address of interest for eligibility you can visit the NRHAs eligibility map here.

The down payment assistance offered by the NRHA is provided in the form of a 3-year second mortgage that is completely eliminated (forgiven) after living in the home as a primary residence for three years.  The secondary loan does not charge any interest and requires no payments.  Eligible loan types include FHA, VA, USDA Rural Development, and exclusive Conventional loans known as HFA Preferred and HFA Advantaged. The program does not have any purchase price limits, although a homebuyer may be limited by their loan type.

Another differentiating feature of the NRHAs loan assistance program is that the home being purchased does not have to be the only property you own.  What this means is as long as you are planning to live in the new home as your primary residence, you do not have to have already sold your previous residence to qualify.

An additional benefit to the Home At Last™ program is their Home At Last™ Pals Pet Adoption Program. 

At the completion of your loan process you will be given a certificate, good for 60 days to present to your local animal shelter. With this certificate the NRHA will cover the entire cost of your pet adoption fee.  For more information on the Home At Last™ Pals Program you can call the Pals hotline at (775) 283-0173 or visit their website here.

If you need help navigating the options for home ownership assistance, feel free to contact me any time.  Although I am not a Loan Consultant, I would be happy to refer you to a lender that will find a program that works for you.  

Down Payment Assistance May Be Right at Your Fingertips

As I mentioned last week, down payment assistance doesn’t just help new home buyers. There are down payment assistance programs available to help Teachers, Veterans, first time home buyers, and many other home buying hopefuls.  

Below are some highlights of the programs offered by the Nevada Housing Division, with links to the program websites for more information.

Home is Possible

Home Is Possible was established by the state of Nevada in 2014 to help home buyers get up to 5% of their home loan value to use towards a down payment or closing costs.  This can amount to thousands of dollars for a one time fee of $675.  Some of the other features of the program include attractive 30 year interest rates, an option for manufactured homes, no first time home buyer requirement, and forgiveness if you live in the home as your primary residence for at least three years.  To qualify for the program the borrower may not own another property at the time of closing, must earn less than $98,500 for government loans (FHA, USDA, VA), and be purchasing a home with a price below $484,350.  The applicant must meet standard underwriting requirements and have a credit score of at least 640.

Home is Possible for Teachers

The Home is Possible for Teachers program aims to aide those who have dedicated their careers to educating our youth.  There is no first time home buyer requirement for this statewide program, which provides a below market interest rate for 30 years and $7500 in bonus money that can be applied toward a down payment or closing costs.  The funds are forgivable after five years if the home has been lived in as a primary residence.  To qualify for the program the borrower may not own another property at the time of closing and must be a licensed full-time K-12 public school classroom teacher in Nevada, making below $98,500, with a minimum credit score of 660 or 640, depending on the type of loan being secured. The program is good for a home with a price below $484,350 that will serve as a primary residence.

With the Home is Possible for Heroes program, an honorably discharged veteran, member of the National Guard, surviving spouse or individual on active duty can qualify for a below market 30 year fixed VA or FHA mortgage anywhere in the state of Nevada.  There is no first time home buyer requirement, and the program is good for a home up to $484,350 with a qualifying income below $98,500.  The borrower must live in the property as their primary residence and may not own any other property at the time of closing.  Credit must meet standard underwriting requirements and the applicant must have a credit score of at least 640.

These are just some of the super amazing programs offered by the Nevada Housing Division.  Though I do not function as a financial services provider, as a real estate professional who wants to see every qualified home buyer realize their real estate dreams, I would be happy to help guide you toward a qualified loan consultant that can get you the assistance you may need.

Down Payment Assistance Doesn’t Just Help New Home Buyers

The struggles to secure housing in the Reno Sparks area are not limited to those who live in transitory housing.

Conventional home buyers are finding themselves hard pressed to save for a down payment, while simultaneously paying high rents and making ends meet.  In the past 6 years the median rent in the Reno Metro area has spiked from $822 per month to $1316 per month, leaving many to struggle with monthly expenses and little hope of saving for a down payment.  In addition to the increase in rents, there is a shortage of low cost rental housing as well.  According to the National Low Income Housing Coalition there are only 21 affordable rental homes available for every one hundred families that need one

A solution to this problem must be a multi-angled one.  One of the solutions I see is getting families out of rental homes that are able to afford traditional home ownership but haven’t been able to get a down payment put together to reduce demand, and hopefully prices, for rentals.  That is were you and I can help. 

There are many down payment assistance programs available nation-wide, and specifically for Nevada home seekers.  These programs offer thousands toward down payment and closing costs., managed by the Nevada Housing Division, has program information and buyer education for teachers, veterans, first time home buyers and more.  If you know someone looking to get out of a rental, let them know there are options to make their dream a reality.  If someone you know needs help navigating the resources available to help them get into a home, let them know that I am here to help.