Tuesday, June 19, 2012

How Does a VA Loan Certificate Work

By Steve Gross

Having a Veterans Administration (VA) "Certificate of Eligibility" is similar to having a loan pre-approval letter from a lending institution. The Eligibility Certificate tells you---and a lending institution that makes VA loans---the amount you can borrow that the VA will insure to 100 percent. That typically represents the most you will be able to borrow to purchase or refinance a home without a down payment.

There are four reasons you might want, or need, a Veteran's Administration (VA) "Certificate of Eligibility." You need a certificate, to apply for a VA home loan if you have never done so before; replace a previously issued Eligibility Certificate; restore the home loan benefit after paying off an earlier VA loan; or, refinance your existing VA or conventional loan.

To get a Certificate, you, or your financial institution, must submit VA Form 26-1880, "Request for Determination of Eligibility," along with other forms, such as your DD-214.

You can obtain a Certificate one of two ways. You can ask a lender to get it for you. The VA has established an Internet-based system, for lenders called "Automated Certificate of Eligibility (ACE)." You provide the lender with the information the VA needs and the lender uses the ACE system to make application for your Certificate. According to the VA, using the ACE system results in their issuing an online Certificate "in a matter of seconds." If the VA does not have enough information in its records, the ACE system may not work for you. In that case, you will have to fill out and submit Form 26-1880 to the VA yourself.

To complete VA Form 26-1880 yourself, use the live link below (see Resources). You will need a copy of Adobe's free Acrobat Reader on your computer to open the link. After filling out the form, print it and put it into the mail (the address is on the form). You should receive your certificate within about 10 days.

In addition to form 26-1889, you also will need to submit a copy of your DD-214. If you do not have your DD-214, you can start the process to get one by visiting the National Archives. The VA recommends that you never let your DD-214 out of your hands. Send copies always.


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