VA-guaranteed loans

Guaranty, not a gift

A VA-guaranteed loan is made by a participating lender, with the Department of Veterans Affairs backing part of the lender's risk. The borrower remains responsible for repayment.

Three separate checkpoints

A certificate of eligibility helps establish eligibility and entitlement; it is not loan approval. The lender evaluates credit, stable income, expenses, and repayment capacity. Residual income is money remaining for family living expenses after relevant obligations.

38 U.S.C. § 3710 authorizes purchase or construction of a home the veteran will own and occupy, along with specified repairs, improvements, and refinancing. A farm residence can qualify when the veteran will occupy it as a home. A purchase solely for investment does not meet the home-purchase occupancy purpose. A condominium project needs VA approval. Covered manufactured homes must be permanently affixed and treated as real property under the law of the state where located.

Value and costs

The property must be suitable as a dwelling, and reasonable value matters. A VA appraisal is not a substitute for a home inspection. No-down-payment financing may be available when entitlement, value, and lender requirements permit. VA loans do not require monthly private mortgage insurance, but a funding fee may apply unless the borrower qualifies for an exemption. Closing costs can remain. A price above appraised value may require cash for the gap or a price reduction. Confirm specific eligibility, fees, and loan terms for the transaction.

Occupancy depends on the transaction

For the qualifying interest rate reduction refinance under § 3710(e), certified previous occupancy can satisfy the occupancy provision, and the same dwelling secures the loan. That rule does not turn a new purchase solely for rental use into an eligible home purchase.

In Florida, the federal program applies. Section 3710(f)(2) makes state real-property treatment relevant to covered manufactured homes located in Florida.