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2nd tier VA loan, post foreclosure, in PA

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HemiPA
New Visitor

2nd tier VA loan, post foreclosure, in PA

Hello All,

 

I will make a long story short. 5 years ago, I lost a home to foreclosure due to extenuating personal circumstances, which was a VA loan and 63,333 was charged to my entitlement.

 

My first question is, am I correct when I say that I have 40917 left in entitlement for a VA loan possibility of 163668? I do have a current certificate of eligibility that seems to say this, but I have had one lender (NFCU) say that that isn't how it works. I don't think the loan officer knows what she's talking about, but I could be wrong.

 

 

Second, about my finances since. Other than the foreclosure, my credit has been spotless my entire life. No lates, no charge offs, no collections, nothing except the foreclosure.

 

MyFico scores are; 706/718/720, but the mortgage scores are 698/686/703.

 

My income is such that my DTI is very low, and I would have no issue covering a mortgage of that size. I currently pay 1800/month in rent!! 

 

I'm just trying to weigh my options and see what are the facts, and reading this forum seemed like a good way to get some info.

 

If you think that I can qualify for the 2nd tier VA loan, do you have any recommendations for VA lenders in PA (Beaver/Allegheny counties)?

 

Thanks for your time!

 

Justin

Message 1 of 7
6 REPLIES 6
ShanetheMortgageMan
Super Contributor

Re: 2nd tier VA loan, post foreclosure, in PA

To start off, the amount of “entitlement” that a veteran has determines the maximum amount of financing they can obtain without having to put money down.  The lender wants the amount of entitlement to equal 25% of your new loan amount.

 

Every veteran gets a “basic entitlement” of $36,000.  Back when real estate was cheap, this was enough to get 100% financing on a modest home in most markets, as it represents 25% of $144k.  Later on, as home prices increased, VA added a “second tier” entitlement of $68,250.  When added together it represents 25% of $417k, which is also the conforming loan limit.  In “high cost” counties, there is even more entitlement than the basic + second tier.  However, if you aren't buying in a high cost county, the total entitlement caps out at $104,250.  So of that, you have used up $63,333, leaving $40,917 in remaining entitlement.  That would allow you to do VA 100% financing up to a $163,338 loan amount (including the VA funding fee, from what VA has told me).  Keep in mind in order to trigger that second tier the sales price needs to be more than $144,000 (since up to a $144k sales price, only the basic entitlement is used).

 

Loan officers at NFCU often do not know what they are talking about when it comes to complicated VA stuff like this.  I am pretty sure they aren't trained on and do not have access to the VA Pamplet 26-7, which explains pretty much every aspect of qualifying for a VA loan.

 

Debt to income ratio for a VA loan prefers to be no more than 41%, but over 41% is OK if you get an automated underwriting approval or have residual income of at least 120% of the required amount.  Your credit scores are fine, sounds like your credit is re-established, and so if it's been at least 2 years since the foreclosure then you should be in good position to get pre-approved for a VA loan.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 2 of 7
HemiPA
New Visitor

Re: 2nd tier VA loan, post foreclosure, in PA

Thanks! Justin
Message 3 of 7
Anonymous
Not applicable

Re: 2nd tier VA loan, post foreclosure, in PA

A little confused.. so if I qualfy for a 350,000 home I cant purchase one because I only have a VA COE of 36,000?

Message 4 of 7
ShanetheMortgageMan
Super Contributor

Re: 2nd tier VA loan, post foreclosure, in PA


@Anonymous wrote:

A little confused.. so if I qualfy for a 350,000 home I cant purchase one because I only have a VA COE of 36,000?


How much of your entitlement is currently used?  What does your COE say? 


What county/state are you buying in?

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 5 of 7
Anonymous
Not applicable

Re: 2nd tier VA loan, post foreclosure, in PA

COE reads 36,000 .. I never used it before.. I am in NY

Message 6 of 7
MauiMan85297
Established Contributor

Re: 2nd tier VA loan, post foreclosure, in PA

Following, as I'll be going through this in 5 months.  Never used my VA benefits and applying now for my COE (which I know I'm 100% entitled too) and just going through the steps as a formality.



Message 7 of 7
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