VA Eligibility | Hawaii VA Loans

How Many VA Loans Can I Have at One Time?

This is a tricky question and one that we, as VA Loan Specialists, have a hard time answering simply. The best answer is, in fact, “it’s complicated”. So, with that in mind, let’s take some time to see how the rules are applied. Thankfully, the VA has recently posted clarifications and examples to make it easier on all of us.

The first thing that we need to understand is that the VA now adjusts the maximum loan amounts by county thanks to recent changes intending to support the ‘Jumbo’ loan market that lenders have shied away from in the past year. Some counties may be at the national limit of $417,000 but if housing prices are higher than average, they may have a higher limit. Here in Honolulu, the limit is currently $793,750 but will adjust downward to $721,050 at the beginning of the year. Remember, that is the max for 100% financing, and that the VA program will actually allow for loan amounts greater than that as with a minimal down payment.

Knowing that, let’s take a look a VA Joe who has just PCS’d to Hawaii from Ft. Riley in Manhattan, Kansas. He still has his a VA loan on his home over there with a balance of $221,050. The VA guarantees 25% of that loan amount, so he is currently using $55,262.50 of his total entitlement. “What is his total entitlement?” you ask. Good question, it is one fourth of our local county loan limit. So because he is buying in Hawaii, the full VA entitlement will be $721,050 divided by four or $180,262.50. We determined that he is already using $55,262.50 of that total because he still has a VA loan on his house in Kansas. What remains is the difference of $125,000 ($180,262.50 - $55,262.50).

Now we know that he has $125,000 of entitlement available if he were to obtain a VA loan here in Hawaii, but what does that mean as far a loan amount? The entitlement guaranty must cover 25% of the loan amount, so we can give him a loan for $500,000 - four times the amount of the remaining entitlement. It’s important to remember that $500,000 is the maximum loan amount and if he wants to finance the VA funding fee, the purchase price will need to be slightly lower than that. He could even obtain a larger loan, but a small down payment would be required.

That’s a lot of numbers to digest. The important thing to take away is that you may be able to use your VA loan privileges for 100% financing even if you have another VA loan outstanding. Feel free to contact us if you need assistance determining the amount of entitlement you have remaining.

Posted by Jim Owens. Filed in Tips, VA Eligibility, VA Loan Limits, VA Purchase

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Top 5 Myths Regarding VA Loans

One of the main reasons we started HawaiiVALoans.com was that we found that there were so many misconceptions about VA Loans. Whether it was the broker/lender giving the wrong information or Veterans finding outdated information from non-reliable websites - it was evident that for whatever reason, the facts about VA Loans were getting distorted.

Over the years - we’ve heard it all. I thought it would be a good idea to debunk the 5 most common myths we’ve heard about VA Loans:

1. “I can only use my VA Loan eligibility once”

This is by far the most common myth we hear - but this is definitely false. There is no limit on the number of times you can use a VA Loan. Now if you’ve had a VA loan previously, you need to have had your entitlement restored by paying off the mortgage (pay off balance, sell the property, refinancing into a conventional mortgage) in order to get another VA Loan. There is a possibility in which you could have more than one VA Loan outstanding at a time - but only if you didn’t use your entire entitlement on the purchase of the first property. Now if you’ve already used a VA Loan previously, you just have to keep in mind that the cost of the VA funding fee is increased from 2.15% to 3.3% (no down payment) for every subsequent use of a VA Loan. If you’ve accumulated equity on the sale of your first home, and you can put a 5% down payment the next time, your funding fee can be reduced from 3.3% to 1.5%.

2. “Sellers won’t accept my offer if they know I’m doing a VA Loan”

This was the case a few years back when it was a “sellers’ market” and it was common for sellers to get multiple offers on a property that were over the asking price. Sellers would often be reluctant to accept VA offers because they had to pay additional costs to cover the VA non-allowables. Now that the market has shifted to a “buyers’ market” - we’ve been seeing sellers more than happy to accept VA offers. In fact, since the guidelines for traditional conventional loans are constantly changing and getting tighter, sellers are more confident that the loan will be approved if the buyer is using a VA loan because the guidelines for VA Loans very rarely change.

3. “VA Loan amounts are not high enough to buy a property in Hawaii”

When I speak with military personnel who are new to the islands, many of them think that the VA Loan amount is $417,000. This was true for the continental 48 states - but in Hawaii and Alaska, maximum VA Loan amounts for 100% was actually 625,500. This past July, congress recently passed a bill which temporarily increases the maximum VA Loan amount to $793,750 for Honolulu County until 12/31/2011. With loan amounts up to $793,750 - there is no shortage of properties in Hawaii that a VA Loan can cover.

4. “Those in the National Guard or Army Reserves are not eligible for a VA Loan”

Not true. Those who have only served in the National Guard or Army Reserves may also qualify for a VA Loan - they just have to have at least 6 years of service compared to 2 years or less in the regular military (Army, Marines, Navy, Air Force, Coast Guard).

5. “I cannot qualify for a VA Loan since I’ve declared bankruptcy in the past”

Again - not true. If you filed bankruptcy but have been discharged for at least 2 years - we can disregard the bankruptcy. If it was discharged within the last 2 years, there is a possibility to still get a VA Loan if:

the applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period, and
the bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified.

Now if you filed for Chapter 13 - you may be eligible for a VA Loan if:

the applicant has finished making all payments satisfactorily.
the applicant has satisfactorily made at least 12 months’ worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit.

These are just 5 of the most common myths we hear about VA Loans. If you have a question about VA loans - feel free to contact us. No VA question is a “stupid” question.

Posted by Gabe Amey. Filed in Tips, VA Eligibility, VA Funding Fee, VA Loan Limits, VA Purchase

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Who’s Eligible for a VA Loan?

The first step in obtaining a VA Loan is to determine whether or not you are eligible. This determination is made based upon the type of service (active duty or reserve) and the time frame.

If you enlisted or entered service before September 7^th, 1980 you may be eligible for the VA Home Loan program if you serced at least 90 days in wartime or 181 days in peacetime. If you enlisted after Setpember 7^th 1980 or entered service as an officer after October 16^th 1981, you would have needed to serve at least 24 consecutive months (or the full period called to active duty not less than 90 days in peacetime or 181 days in wartime) to qualify for VA Loan benefits.

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Posted by Gabe Amey. Filed in Tips, VA Eligibility

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