Recently Caliber Home Loans, Inc. hosted several VA lending webinars featuring our VP of Military and Veteran Lending Jeff Wilson and our Executive VP of Third Party Originations David Schroeder. Our attendees had many follow-up questions about this very hot but sometimes misunderstood market, which we’ve compiled with Jeff’s answers below. Have a question you don’t see below? Email our VA Support mailbox, and Jeff and team will be happy to help.
A recording of our webinar can also be viewed here, and you can download the presentation here.
Answer from Jeff Wilson, VP of Military & Veteran Lending
- If you have used VA loans twice for a single veteran, when you refi will VA help a third time on fees?
No, VA doesn’t have any way to support fees, and the funding fee is always associated with each loan to cover the guaranty responsibility for that loan.
- What is clear entitlement, and does every veteran have clear entitlement?
Every veteran starts with clear entitlement and once they use some or all of it, that is tied to the loan until it is paid in full. Once the loan is PIF, the amount used can be restored and used again
- What about the time it takes for appraisals and the seller not accepting VA offers because of the perceived higher standards for house quality and conditions on the appraisals?
That is entirely an education issue. Listing agents believe the VA appraisal has a higher standard but it is governed by the same USPAP rules as conventional or FHA. In fact, VA appraisals have lower requirement for MPRs than FHA. VA does not require appliances. It will be noted on the appraisal, but it isn’t an MPR. Safe, sound, and sanitary is a pretty low bar for acceptable VA appraisals.
- I have a client who served 5 years in the US Air Force, but says he's one of those immigrants who had his check signed by the Danish gov. Would he still qualify?
That’s one that would have to go to VA for approval. My guess is no. VA did allow some foreign nationals who volunteered for service in the US military to be eligible, but most of the time that was only for war time service. That said, you do not have to be a US citizen to get eligibility for a VA loan, but you do have to be a legal resident with permanent status in the US.
- What is the condo search website please?
- Can an active duty vet add a parent as a coborrower?
Yes, but that makes it a joint loan subject to a down payment.
- Do joint loans have to be sent to the VA for approval prior to closing?
Only a joint veteran and nonveteran loan. Vet/Vet does not.
- Does a spouse count as having to put half the down payment?
No, a spouse does not count in the borrower count for joint loans.
- Please explain a VA joint loan calculation.
Bear with me on this example…the math gets busy. VA will guaranty the veteran’s portion of the loan. If the loan is $400K the veteran’s portion is $200K. GNAM says it requires a 25% guaranty position on the lesser of the purchase price or value. A $400K loan requires $100K in guaranty or guaranty plus down payment. VA will give a $50,000 guaranty without a down payment. If the borrowers put the other $50,000 as a down payment, it just reduced the loan to $350K so VA will now guaranty only half of that, or 25% of $175,000. That’s just $43,750, plus the $50,000 down is only $93,750 and that is only a 23.4375% guaranty. So it needs more DP. The amount required is going to be close to 14.286% so in this example it would be $57,144 DP. That leaves a loan of $342,856 and the veteran’s portion is $171,428. Now VA will provide 25% of that for $42,857, plus $57,144 equals $100,001. A buck extra for good measure.
- Where can I find the VA handbook?
Where can I find the non-allowable fees?
Lenders Handbook - VA Pamphlet 26-7 - Web Automated Reference Material System
Chapter 8 begins by establishing fees the borrower can pay in section 2 called “itemized fees and charges”. Paragraph 2.d. discusses the 1% origination charge in addition to the itemized charges. This 1% fee lists a number of fees that fall in this category that is covered by the 1% fee. Basically, any fee not listed in paragraph 2.c. is considered an “Origination Charge” limited to 1%. Paragraph 3 explains that if the 1% charge is made, then no other Origination Charges can be charged to the Veteran. If a lender doesn’t charge an Origination Fee or the fee is less than 1%, then the lender can itemize and charge other fees up to the total of 1% of the loan amount. Paragraph 3 also discusses fees the borrower can never pay: Attorney’s fees (except in attorney closing states), Brokerage fees (real estate broker), Prepayment Penalties, and HUD Construction Inspection fees.
- Do you have any marketing material?
site – CaliberPro
– has ample marketing materials that are not branded so you can use them.
- What is clear entitlement and does every vet have clear entitlement?
Every veteran starts with clear entitlement and once they use some or all of it, that is tied to the loan until it is paid in full. Once the loan is PIF, the amount used can be restored and used again.
- I never did a VA loan but would like to get the knowledge to do one.
Keep following our training, and you’ll get lots of info on how to do VA loans. Don’t be afraid to ask questions, we have answers.
- I have a question regarding ordering appraisals.
- The veterans that get transferred, will we have issues with time at current residence (if required on VA Loans) for VA first-time homebuyers?
Not generally. Transfers are not under the control of the veteran.
- Why does the pest inspection fee always come up? For years this has always been a debate.
Good question. Did you know that the veteran has been able to pay for the pest inspection since 2014? Most people still think the veteran can’t and the seller has to.
- 1% per fee or total fees?
1% is the origination charges. Those charges not listed as allowable charges are origination charges
- Can you do 100% financing on a 4 unit in Solano County CA?
Absolutely. If the veteran has clear entitlement, there is no limit on the loan amount.
- What was the email to VA Support again?
- Any future dates for the CVLS course?
If so, what's the cost for certification?
The NAMB website lists upcoming events here
. The NAMB certification for CVLS is $399 for non-NAMB members and $199 for members.
- I have done quite a few VA loans with Caliber (11 last month) – are my VA borrowers getting the challenge coins?
Yes! We were a bit behind because we updated the coins in April and the stock of older coins ran out faster than we thought, but anyone in May should have received a coin already. Let us know if anyone didn’t get one.
- Can you share the COE email address?
- Will we be getting a copy of the slideshow?
You can download the presentation from the link above the Q&A.
- Does VA allow gift equity from a family member?
No. The equity only sets the sale price lower and will not affect things like funding fee reductions for the equity as if it was a down payment.
- Any update on VA Reno?
Wholesale does not allow VA Reno yet.
- Are there VA exceptions for issues like flooring if the veteran has the means to correct such issues. How to? Examples? Timeline?
These are exceptions with VA regarding MPRs. If the flooring needs to be replaced, it can be done as a holdback. Holdbacks must be completed within 60 days. For example: Old thread worn carpet has holes in it. This is an MPR safety issue. The carpet must be replaced. But rather than get cheap carpet to pass inspection, the buyers want tile. Best time to do tile is when the home is empty. We can escrow for the tile as long as it will be done immediately after closing.
- Future of VA Construction?
VA Construction is not offered. The problem with these loans is that they have to be held in portfolio and cannot be sold until the home is complete. Moreover, the cost is high. Most borrowers are better off getting a loan from a construction lender like a CU or small local bank and then get a VA loan take out. In order to reduce the cost on a VA construction loan, the rate is often inflated. This pretty much almost guarantees a refinance within the next year after completion. Why spend the excess and then a refi?
- Does the VA appraiser do the well water test?
No, the well test is done by a certified testing company.
- If a borrower owns a condo and has no rental history, can he convert that condo to a rental and count his income assuming we have a copy of a signed lease and proof of the first month’s rent? Or does he need to have a history of being a landlord before we can count that rental income?
If the borrower is converting from home to rental, then different rules apply. They can rent and get full credit for the rental income up to the mortgage amount (plus HOA dues) to offset the mortgage. Any excess rent will not count toward income. They don’t need reserves and they don’t need rental experience.
- Is there any way of doing a cash-out VA loan in Texas?
Certainly. If the current loan is a purchase loan, then they can do a cash out. The new cash-out loan is now considered a 50(a)(6) loan and is subject to all sorts of other limitations under Texas law.
- For the residual income test, can we use entire household income?
The child has SSA survivors benefits. The child income is not being used to qualify for the VA loan, but can it be used to meet the residual income test? The child SSA income can be used if the child is a minor. It can be used to qualify and for residual.
- What are the most common fees that need to be reimbursed?
Overcharges to the 1% origination fee limit are the most common. Second most common is the funding fee overcharge.
- If the Vet is disabled and does not have to pay property taxes, how can that benefit his DTI?
Property taxes are included in the housing debt so if those are eliminated then the DTI will go down. We can do this in certain states depending on state law, but Texas is a common state for excluding property taxes.
- Are there any types of VA bridge loans for VA buyers wanting to buy before they sell their home?
No. The buyer can sell and purchase the same day with restoration of entitlement, but cannot delay the sale of a home that has entitlement used that is necessary for the purchase. It has to be cleared before or on the same day.