Re: Evaluating Convention
al vs. FHA (VA & USDA)
04-20-2011 12:49 AM
Update: Certificate of Eligibility shows total entitlement charged is $65K with basic entitlement of $0. Lender thinks this means I am not eligible for a VA loan however, I discussed this w the VA loan center and was informed I had approx $40K remaining in 2nd tier entitlements. The base price of the home I want to buy is $185,990 which means I would need a down payment around $7K. Lender is requiring that I obtain a letter from the VA stating my remaining entitlement for the purchase of the home with all calculations. Anyone ever received such a letter from the VA? As for Purchase price I looked at the Guaranty examples on the VA website but am unsure if this price includes or excludes fees/closings, etc—assumption is that it is simply the base price with nothing else included. Is this a correct assumption? Any thoughts on this situation would be appreciated. Thanks
That is correct - if you have $0 basic entitlement and $40k remaining in 2nd tier then that provides a 25% guarantee on a $160k loan amount, anything exceeding that sales price would require a 25% down payment on the additional amount (ex. $250 down on $1k increase in price)... but one needs to have a total loan amount which exceeds $144k in order for that 2nd tier entitlement to kick in. Purchase price always is the purchase price from the seller, nothing more (energy improvement items, fees, etc).
The letter from VA is a requirement of many lenders, and VA should be able to provide you a letter. Contact the RLC that covers your state.