Savings Bank specializes in four different types of loans:
– VA – FHA – Construction
Following is a brief
description and requirement for each type of loan. Contact us today
to find out if you qualify.
Seller can pay a
maximum of 3% on 90.01 – 97% LTV’s and a maximum of 6% on LTV’s 90
and below. Seller can pay a maximum of 2% on investor loans.
loan amount for a single family residence is
$322,700. Multiple family
conforming loan amounts go as high as $620,500 for a four plex.
Any loan amount that exceeds these limits will usually be classified as
a Jumbo loan. Jumbo loans are unlimited but, will usually be
priced higher than a conforming loan.
(PITI) should not exceed 40% of gross income. PITI + debts should not
exceed 50% of gross income. Down payment from borrower remainder can be
gift funds – gift must be from a relative. Typically two months PITI
reserves are required. One Year Adjustable Rate loans are usually
qualified at the start rate plus 2%. Conventional Fixed Rate using a
buydown will qualify at the bought down rate. Buydowns are not allowed
on the 3% LMC 3% Down Program.. Bankruptcies must be discharged for 2
years and credit must be reestablished.
95% LTV’s all
borrowers must occupy. 90% LTV’s non-occupant must be related. 80% LTV’s
non-occupant need not be related. 97% LTV’s can not have non-occupant
co-borrower. Occupant borrowers ratios should not exceed 35/43 unless
putting 20% or more down.
Most recent year tax
return, with schedule E. (Total income, minus expenses – not including
depreciation). If too recent for schedule, deduct 25% vacancy factor and
PITI from gross rent. Rental agreement will be required.
VA Loan Guaranty / VA LOAN PROCESS DETAILS
VA’s Home Loan Program is for veterans and active duty military personnel (referred to as veterans throughout the rest of the document) and certain members of the reserves and national guard. VA’s program provides an excellent product and benefit for those individuals who have served or are serving to protect our families and our nation, as well as giving them a form of financing that will allow real estate professionals to sell more homes. Golf Savings Bank has approved thousands of VA loans over the last 22 years. We are very experienced in obtaining VA mortgages for our clients and look forward to helping you.
For those who are unfamiliar with the program, there are several advantages to using VA’s Home Loan Program. The VA allows a veteran who qualifies income and credit-wise to purchase a primary residence without putting money down towards the sales price, as long as the sales price does not exceed the appraised value. Veterans do, however, need money towards closing costs and the earnest money deposit, which the seller generally requires when a sales contract is signed. Closing costs may be paid by the seller, which is an item to consider when the sales price is being negotiated.
Other benefits of using VA’s program (other than the 100% financing of the sales price) include:
- loans are assumable, provided the assumer is qualified;
- Veteran’s closing costs are limited by VA;
- additional assistance is offered by VA should veterans have problems making their home loan payments in the future
- prepayment of the loan without a penalty
Here are some quick facts you may find useful concerning purchase transactions:
- VA does not have a maximum loan amount. However, lenders do sell loans on the secondary mortgage market, so they will generally limit loans to $240,000 with no downpayment. With a downpayment, loans may exceed $240,000.
- The veteran does have to occupy the home as their primary residence.
- The veteran does not have to be a first time home buyer and may reuse his/her benefit.
- There is no private mortgage insurance, but VA does charge an up front VA funding fee, which may be financed. The exception to this is that if a veteran is in receipt of VA service connect disability payments each month, he or she does not have to pay a VA funding fee.
- The seller can pay for closing costs. There is a requirement that seller concessions do not exceed 4%, but only certain items are considered as part of the concession; ie. payment of pre-paids, VA funding fee, payoff of credit balances or judgments on behalf of the veteran, funds for temporary buy-downs (not discount points).
- The veteran is not allowed to pay for the wood destroying insect (termite) report; it is generally paid by the seller.
Here are additional items you may choose if you find them useful:
Certificates of Eligibility We can help you with obtain yours. Simply click on this link, complete the form and contact one of our loan officers at any of our branches.
Lost proof of service? Visit http://www.archives.gov or www.archives.gov/facilities/mo/st_louis/military_personnel_records/veterans_and_next_of_kin.html to locate your DD-214 and they will send you a copy.
How Much Can the Veteran Afford (And Other Important Factors)
Please note that VA uses 2 methods for qualification purposes. The primary method of evaluating a veteran’s income is the residual income method. Under this method, the underwriter determines that a veteran has sufficient income to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments. VA also uses a debt-to-income ratio method like many programs. However, VA uses only one ratio which is the ratio of total debt (both housing and other debt) to income which is 41%.
IMPORTANT: This is provided for informational purposes only. A GSB Loan Officer is the best resource to see how large a VA loan you truly qualify for. We will look at income (amount and stability), credit and compensating factors involved when rendering a decision. VA also allows lenders to use certain approved automated underwriting systems.
Steps in the Process of a VA Home Loan
There are five basic steps when obtaining a VA backed home loan. Although there are lots of details within each step and some may overlap, here is a basic overview of how the process works.
- The veteran should usually apply for a mortgage loan with one of our qualified loan officers prior to looking for homes. Part of this initial process is for the veteran to obtain their Certificate of Eligibility. Once you are qualified, it is time to go select the home you are interested in purchasing. If you don’t have a real estate agent we can suggest one to you that knows how to write VA purchase transactions. The purchase and sales agreement should contain a VA option clause. Sample wording for a VA option clause:
“It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise or be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs.” The contract must also allow the veteran to “escape” from the contract without penalty if he/she is unable to obtain a VA loan.
- After the purchase and sales agreement has been accepted by all parties it is time for us to complete an updated loan application
- We will “process” (develop) all credit and income information. We will also order a VA appraisal. VA’s appraisal is not a home inspection or a guaranty of value. It is an estimate of the market value as of the date the inspection is made comparing it to similar homes that have recently sold in that area. Although the appraiser does look for obviously needed repairs, VA does request that appraisers not address cosmetic items. VA does not warrant the condition of existing homes. The appraiser is a licensed individual who does not work for VA but is chosen by VA to assure his/her review is unbiased in any way. We can not request which appraiser to use, they are assigned on a rotation basis.
- Upon receipt of the appraisal and all supporting documentation on credit, income and assets, we will “underwrite” the loan. It is Golf Savings Bank who reviews all the data collected and decides if the loan should be granted, developed for additional data or if the veteran does not qualify and must be denied. Although VA does “underwrite” some loans, it is very rare. The decision on whether or not to approve the loan is generally made by us.
- The final step for loans that meet VA regulations and guidelines is the loan “closing” (when the transfer actually takes place.) We have our own escrow company so the file never has to leave our office for closing. We will handle the closing and coordinate the date and time for all parties to sign their final paperwork.
Military Service Requirements for VA Loan Eligibility (which would be the 2nd link to the paragraphs under this section on the attach)
*NOTE: Applications involving other than honorable discharges will usually require further development by VA. This is necessary to determine if the service was under other than dishonorable conditions.
Wartime – Service during:
WWII 09/16/40 to 07/25/47
Korean 06/27/50 to 01/31/55
Vietnam 08/05/64 to 05/07/75
You must have at least 90 days on active duty and been discharged under other than dishonorable conditions. If you served less than 90 days, you may be eligible if discharged for a service connected disability.
Peacetime – Service during periods:
07/26/47 to 06/26/50
02/01/55 to 08/04/64
05/08/75 to 09/07/80 (enlisted)
to 10/16/81 (officer)
You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions. If you served less than 181 days, you may be eligible if discharged for a service connected disability.
Service after 09/07/80 (enlisted) or 10/16/81 (officer)
If you were separated from service which began after these dates, you must have:
(a) Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or
(b) Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early out), or have been determined to have a compensable service-connected disability;
(c) Been discharged with less than 181 days of service for a service-connected disability. Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.
Gulf War – Service during period 08/02/90 to date yet to be determined
If you served on active duty during the Gulf War, you must have:
(a) completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable; or
(b) completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early out), or have been determined to have a compensable service-connected disability, or
(c) been discharged with less than 90 days of service for a service-connected disability. Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.
Active Duty Service Personnel
If you are now on regular active duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.
Selected Reserves or National Guard
If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and
(a) were discharged with an honorable discharge; or
(b) were placed on the retired list; or
(c) were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service; or
(d) continue to serve in the Selected Reserves.
Individuals who completed less than 6 years may be eligible if discharged for a service- connected disability. Eligibility for Selected Reservists expires 09/30/2009.
You may also be determined eligible if you:
(a) are an unremarried spouse of a veteran who died while in service or from a service connected disability, or
(b) are a spouse of a serviceperson missing in action or a prisoner or war.
Eligibility may also be established for:
(a) certain United States citizens who served in the armed forces of a government allied with the United States in WWII.
(b) individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.
Obtaining a Certificate of Eligibility
VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan. Eligibility applications can involve:
- an original determination of eligibility for the home loan benefit
- a request to replace a lost certificate of eligibility
- a request for restoration of the benefit after payment in full of a previous VA home loan
- issuance of a certificate reflecting a current outstanding loan for refinance purposes
In each case, VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits, is the correct application.
To request a certificate from VA, you must:
- Complete VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits. (requires free Adobe Acrobat Reader)
- Send the completed VA Form 26-1880 and any supporting evidence (see 3 and 4 below) to one of our Branches. One of our experienced VA loan officers will work with you to obtain your certificate. Under normal circumstances a response can be anticipated in roughly 14days. This time frame will vary during periods of heavy activity
- Include photocopies of your most recent discharge or separation papers covering active military duty, which show active duty dates and type of discharge. IF YOU SERVED ON REGULAR ACTIVE DUTY (NOT A RESERVIST) AND WERE DISCHARGED AFTER 1975 OR YOU HAVE PREVIOUSLY HAD A VA LOAN, IT MAY NOT BE NECESSARY FOR YOU TO PROVIDE DOCUMENTATION OF YOUR MILITARY SERVICE. However, it is best to provide such evidence with your VA Form 26-1880 if it is readily available so as to avoid possible delays in processing your request.
If you were discharged from regular active duty
If you were separated after January 1, 1950, the appropriate documentation of your military service would be DD Form 214, Certificate of Release or Discharge from Active Duty. If you were discharged after October 1, 1979, DD Form 214, copy 4 would be appropriate. A PHOTOCOPY OF DD214 WILL SUFFICE….DO NOT SUBMIT AN ORIGINAL DOCUMENT.
If your service was in Selected Reserves
If you served in the Selected Reserve you must provide documentation sufficient to establish that you served a minimum of 6 years with points earned for weekend drills or active duty for training and received an honorable discharge. Since there is no uniform document similar to the DD214 for proof of service in the Selected Reserve, a number of different forms may be accepted.
For those who served in the Army or Air National Guard and were discharged after a least 6 years of service, NGB Form 22 may be sufficient.
Those who served in the Army, Navy, Air Force, Marine Corps or Coast Guard Reserves may need to relay on a variety of forms. Often it will be necessary to submit a combination of documents such as an Honorable Discharge certificate together with a Retirement Points Statement.
If you remain on active duty
If you are now on regular active duty and have not been previously discharged from active duty service, you must submit a statement of service which includes the name of the issuing authority (base or command), and is signed by or at the direction of an appropriate official. The statement must identify you (SSN), and provide your date of entry on active duty and the duration of any time lost. If you remain on active Selected Reserve duty, the statement of service should be from your unit CO and should cite the length of time you have served with the reserve unit.
If you are seeking restoration of your previously used benefit, you should include any evidence of payment in full of your prior loan (copy of HUD-1, settlement statement for example) that you have in your possession. Normally VA receives notification that a loan has been paid, but this does not always happen. VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan.
Seller can only pay the discount points and prepaids without having an
effect on the loan amount. (seller can pay a maximum of 6% closing
costs-including discount, however the borrower’s loan amount will be
lowered.) Maximum Loan limits vary by county.
(PITI) should not exceed 33% of gross income. PITI + debts should not
exceed 43% of gross income. Down Payment may be gift. $100.00 in
reserves are required. Adjustable rate loans are qualified at 1% above
the note rate.
a) Upward mobility must be verified.
b) Overall underwriting may be slightly more
c) Interest rate caps for FHA ARM’s are 1% yearly and
5% over the lifetime.
Fixed rate loans using a buydown will be qualified at the bought down
rate. Bankruptcies must be discharged for 2 years and credit must be
Must be a relative,
and not own other rental property. No set occupant borrower ratios, but
non-occupant cannot be strength of the loan. a) Occupant borrower ratios
should be reasonable use 35/43 as a guideline. b) Look for upward
mobility of occupant.
Most recent year tax
return, with schedule E. (Total income, minus expenses – not including
depreciation). If too recent for schedule, deduct 10% vacancy factor and
PITI from gross rent. Rental agreement will be required.