Can Veteran purchase a property from his parents and can the parents gift him part of their equity in subject property?
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.
Does VA have a rate & term refinance option?
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.
Can a Veteran do a cash out refinance on a lien free property?
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 out of the refinance transaction.
Can a Veteran refinance a property in his own name if he is neither on title and nor on mortgage being paid off?
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.
What are requirements of Termite inspection on VA loans?
As per VA guidelines termite inspection reports are required in any of the following cases:
- 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);
- If Termite inspection report is required as per VA local requirements for subject state, county or city;
- If Appraisal report indicates the probability of Wood destroying pest exist in subject property.
Can person other than Veteran and spouse take title to the subject property?
No, only Veteran and spouse can take title to the subject property.
Can a Veteran use rental income from current primary residence being departed in favor of new primary residence?
Yes, Veteran can use rental income from departing residences. 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.
Does VA allow exclusion of un-reimbursed expenses from overall income analysis?
As per VA guidelines un-reimbursed expenses will be deducted from qualifying income in the following cases:
- If the borrower is earning commission income which is 25% or more of annual employment income; or
- If the borrower reports income from Automobile allowance as part of monthly qualifying income.
What are the maximum VA loan limits for Purchase / Cash-out refinance transaction?
Base county limits for VA loans are $417,000; 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 $417,000 and property value is $525,000, in this case maximum loan amount allowed will $498,000. The maximum loan amount is calculated by taking 75% of property value ($525,000*.75 = $393,750) and adding VA guaranty to this amount ($104,250).
Can a Veteran with existing VA guaranteed loan purchase another primary residence using VA financing?
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.
Can a Veteran purchase a new primary residence with higher purchase price, if s/he is planning to sale current primary residence secured by VA guaranteed mortgage in concurrence to purchase of new home?
Yes, a Veteran can purchase a new primary residence with higher purchase price as long as 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 restoration.
Is a loan amount restricted to county limit on VA interest rate reduction refinance loan (IRRRL)?
No, loan amount is not restricted based on county.
Can a new loan amount include closing cost and pre-paid expenses on VA interest rate reduction refinance loan (IRRRL)?
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.
If there are delinquent taxes on subject property, can this be included in new loan amount on VA Interest rate reduction refinance loan?
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.
Can new interest rate being offered to Veteran on VA interest rate reduction refinance loan (IRRRL) be the same as interest rate on existing loan being refinanced?
No, there has to be reduction in rate being offered except for refinance Adjustable rate note to fixed rate note.
Can Veteran's reduce their loan term with VA interest rate reduction refinance loan (IRRRL)?
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.
Is there any seasoning requirement on VA interest rate reduction refinance loan (IRRRL)?
No, there is no seasoning requirements on VA interest rate reduction refinance loan.
Does VA allow deletion of borrowers from original note on VA interest rate reduction refinance loan (IRRRL)?
No, VA does not allows deletion of borrower except in the following cases:
- Deletion due to divorce
- Deletion due to death
- Deletion due to legal separation
If there is deletion of borrower due divorce / death / Legal separation the remaining borrower will be credit qualified or we will require proof showing they were making payment for last six months.
Does VA allow addition of borrowers on VA interest rate reduction refinance loan (IRRRL)?
No, VA does not allows addition of borrower except in the following cases:
- If Veteran was Unmarried on old VA loan, a spouse can be added
- If Veteran and spouse were obligated on Old VA loan, a Veteran can delete ex-spouse and add different spouse.
Does VA require any minimum net tangible benefits on VA interest rate reduction refinance loan (IRRRL)?
No, VA does not require a specific amount of reduction in monthly mortgage payments. However the time taken to recoup closing costs, discount points and funding fee (if any) associated with new interest rate reduction refinance loan should not exceed the loan term.
Additionally, loans with months to recoup exceeding 120 months are not acceptable as per Sun West guidelines.