Frequently Asked Questions

Yes. VA has no restriction on non-arms length transactions. However, gift of equity will be reviewed as reduction in sales price and cannot be used to lower loan-to-value for the purpose of calculating VA funding fees.

The only refinance options offered by VA are VA interest rate reduction refinance loan (IRRRL) or VA cash out refinance. A refinance that is not a VA IRRRL will be processed as VA cash out refinance regardless of liens being paid off or amount of cash back to Veteran.

No. Lien free properties are ineligible for Cash out refinance. As per VA guidelines there should be an existing lien on the property that needs to be paid off using refinance loan proceeds.

No. Borrower needs to be on the title prior to loan docs to be eligible for new VA financing along with proof that the Veteran is occupying the subject property as a primary residence.

As per VA guidelines termite inspection reports are required in any of the following cases:

1. If subject property is located in an area where probability of termite infestation is "very high" or "moderate to heavy" according to termite infestation probability map published in "The council of American Building Officials" (CABO);
2. If Termite inspection report is required as per VA local requirements for subject state, county or city;
3. If Appraisal report indicates the probability of Wood destroying pest exist in subject property.

No. Only Veteran and spouse can take title to the subject property.

Yes. Veteran can use rental income from departing residences to offset the mortgage payment on the departing residence. It will be subject to the availability of executed leases to offset the mortgage payment and if there is no indication that property will be difficult to rent. Any positive income cannot be added to qualifying income.

As per VA guidelines un-reimbursed expenses will be deducted from qualifying income in the following cases:

1. If the borrower is earning commission income which is 25% or more of annual employment income; or
2. If the borrower reports income from Automobile allowance as part of monthly qualifying income.

Base county limits for VA loans are $453,100; these limits may be higher for certain high cost areas. VA guidelines have no restrictions on maximum loan amount, however maximum guaranty would be 25% of lesser county limit or Purchase price / NOV (less any previously used entitlement).

Sun West will allow loan amount exceeding VA county limits as long as VA guaranty plus borrower's cash investment / equity covers 25% of lesser of Purchase price / NOV. Refer below example of guaranty calculation:

Example: If subject county limit is $453,100 and property value is $525,000, in this case maximum loan amount allowed will $507,025. The maximum loan amount is calculated by taking 75% of property value ($525,000*.75 = $393,750) and adding VA guaranty to this amount ($113,275).

Yes. A Veteran can purchase a new primary residence using VA financing as long as the remaining entitlement is sufficient to cover 25% guaranty plus cash investment requirement.

However, veteran may not qualify if new loan amount is less than $144,001 as in this case only basic entitlement will be available for guaranty purposes which is already used by Veteran.

Yes, a Veteran can purchase a new primary residence with higher purchase price as long as veteran has a remaining entitlement, plus Veteran's cash investment covers 25% of Notice of Value. If remaining entitlement is not sufficient we would need final closing disclosure of property being sold and VA form 26-1880 requesting benefit restoration.

No, loan amount is not restricted based on county.

Yes, a new loan amount can include closing cost and pre-paid expenses. However origination fees exceeding 1% of new loan amount and discount points exceeding 2% cannot be included in financed loan amount.

No. Delinquent taxes cannot be included in new loan. If there are any delinquent taxes on the property Veteran will have to bring additional funds at closing equivalent to the amount of delinquent taxes.

No. There has to be reduction in rate being offered except for refinancing an Adjustable rate note to a fixed rate note.

Yes, Veterans can reduce their loan term with VA interest rate reduction refinance loan. However if this reduction in term results in increase in housing payment (PITI) of 20% or more then loan must be credit qualified.

Yes. Following seasoning requirements apply:

• At least six consecutive months payment must be completed without any late, on mortgage being refinanced. (Prepayments not allowed); and
• All mortgages on the subject property must be paid within the month due for the month prior to disbursement.
• If the loan being refinanced was modified, then at least six payments must have been made from the first payment date of the modified note. Prepayments are not allowed.
• The note date of the refinance loan must be on or after the later of:
• the date after 210 days from the date on which the first monthly payment was made on the mortgage being refinanced, and;
• the date on which six consecutive monthly payments have been made on the mortgage being refinanced. Prepayment is not allowed.

No. VA does not allow deletion of borrower except in the following cases:

1. Deletion due to divorce
2. Deletion due to death
3. Deletion due to legal separation

If there is deletion of borrower due to divorce / death / Legal separation the remaining borrower will be credit qualified or we will require proof supporting that they were making payment for last six months.

No. VA does not allow addition of borrower except in the following cases:

1. If Veteran was Unmarried on old VA loan, a spouse can be added.
2. If Veteran and spouse were obligated on Old VA loan, a Veteran can delete ex-spouse and add different spouse.

Yes. Following requirements apply:

• Months to recoup closing costs must not exceed 36 months unless refinancing from an ARM to FRM or there is reduction in term.
• Below benefit requirement must be met:
• FRM to FRM transactions must meet following benefit test
• From FRM to FRM: At least 0.5 percentage point (i.e. 50 basis points) below the prior interest rate.
• FRM To ARM: At least 2 percentage point (i.e. 200 basis points) below the prior interest rate.
• If there is discount points on the loan, following requirements must be met:
• An acceptable appraisal report is required to determine the property value.
• The LTV is limited to 90% of more than 1% discount points charges on the loan. If up to 1% discount point charged, maximum LTV is limited to 100%.