Can You Buy Property With a VA Loan

By Julie Segraves

One of the many benefits available to former and current members of the armed services is the VA loan program. The VA loan program provides guaranteed loans, made by private lenders, to eligible veterans for home purchases. If you were dishonorably discharged, the VA will make a determination of whether the discharge was made under other than dishonorable conditions. Both wartime and peacetime veterans are eligible subject to length of active duty requirements.

The VA home loan program gives veterans a guaranteed loan that usually is used for the down payment on property. The VA portion guarantees the lender that the down payment amount will not be lost should the veteran default on the loan. It also helps the veteran acquire favorable financing terms. Loans are available for specialty housing needed for veterans with service-connected disabilities. As of 2010, the minimum loan amount is $36,000.

Borrowing limits are adjusted each October to reflect current economic conditions and vary depending on the county in which the desired property is located. if you qualify for the loan based on VA income and credit standards, and the loan exceeds $144,000, you can borrow up to 25 percent of the county loan limit for a single-family home. You must obtain a Certificate of Eligibility from the VA, although the lender may secure this for you.

There are three categories of eligibility for VA home loans: Category A is for veterans, active duty, reservists and National Guard members who have served on active duty; Category B is for reservists and National Guard members who never served on active duty; and Category C is for spouses of service members who died on active duty or as a result of active duty. Each war or period of peacetime has a beginning and ending date of eligibility and duty requirements. The duty requirements can be waived for service-connected disability discharges.

For veterans of World War II, Korea or Vietnam, you must served 90 days on active duty. For periods of peace directly following the previous three wars, you must prove 181 days of continuous active duty. Veterans with service after 1980 (1981 for officers) must have served at least 181 days to 24 months of active service, unless discharged early due to a government program. For the Gulf War you must have completed 24 months of active duty or at least 90 days under certain circumstances. Current members are eligible after 181 days of continuous active service and selected reserve and National Guard members can establish eligibility if you served six years. Proof of eligibility for former active duty members is your DD Form 214. For current active duty members, selected service or National Guard members, you must submit a current statement of service signed by the adjutant, personnel office, or commander of the unit or higher headquarters. Surviving spouses must submit a DD Form 1300.

The VA home loan program gives you the ability to apply a higher down payment than you otherwise may be able to afford. As a result, your interest rate may be lower as the amount of the mortgage is reduced by the higher down payment. Participants in the program are also eligible for free pre-purchase counseling. Should you run into problems paying your loan, the VA has various programs available to help you keep your house.

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