How to Purchase a Foreclosed Home With a VA Home Loan

By Rhonda Campbell

Typically military personnel who served in the United States armed forces and who are currently on active duty or reserve status or who were honorably discharged are eligible to receive a home loan from the Department of Veterans Affairs. In addition, the Department of Veterans Affairs notes that if you served in the military of a government ally in World War II you may be eligible to receive a VA home loan. The loans are made at reasonable down payment and interest rates. Approved loans must be repaid within the stated time frame. Interested persons are encouraged to complete pre-purchase counseling to understand the responsibilities and requirements of owing a home.

Get a certificate of eligibility. Ask your lender to request your certificate of eligibility by completing an "Automated Certificate of Eligibility". In the event that the automated system does not have sufficient data on your military service, you may have to complete and mail in a VA Form 26-1880 following the steps below.

Download and complete a copy of the VA Form 26-1880 "Request For A Certificate of Eligibility For Home Loan Benefits" (see resources). Provide personal information such as your name, address, date of birth, military service experience and whether or not you have received a previous VA home loan. Include a copy of your DD Form 214 "Certificate of Release or Discharge From Active Duty" with your request. Complete Form 180 (see resources) to request proof of your military service if you do not have a copy of your DD Form 214. Submit the completed VA Form 26-1880 to Department of Veterans Affairs, Eligibility Center, P. O. Box 20729, Winston-Salem, NC 27120.

Follow-up on the status of your eligibility by calling the VA Loan Eligibility Center toll free at 888-244-6711. Speak to an eligibility officer. Ask about the status of your request or whether your eligibility was approved or denied.

Visit REO Trans (see resources) or work through your own real estate agent to locate the foreclosed house you want to purchase. If you use ReoTrans, click on the state you want to purchase a home in. Follow the intuitive steps to search for homes that have features you are looking for such as three bedrooms, two baths and an adjoining garage. Email questions about the property to the listing agent by filling out the online form titled "Have a question?"

Complete necessary paperwork. Provide your lender with detailed information on your financial history. Include items such as social security numbers for you and anyone who co-signs for your loan application, six months worth of checking and savings account statements, statements on other assets including your 401K, bonds, stocks or other retirement programs. Include three months of pay stubs, W-2 forms, credit card statements, all outstanding loan balances including car loans and proof of your current residence for the last two years. Keep in mind that some lenders may require additional information.

File the application. Make sure that your home loan is within the county loan limits (see resources). Refer to the document titled "Calculate Loan" in the resources section of this article to figure the amount of the loan the VA will cover.

Sign a purchase contract after your loan is approved. Work through your lender to assign a reputable appraiser to inspect and value the home. Pay all necessary fees related to the appraisal. Obtain your Certificate of Reasonable Value. Attend the loan closing meeting with the lender, your real estate agent, your attorney and all co-signers. Review monthly mortgage payments and all related mortgage loan terms. Sign the mortgage note and all other necessary papers. Keep in mind that the lender will submit the final signed loan to the VA for record keeping.

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