Chapter 17 Cal-Vet Loans (California Example)

An additional type of government sponsored financing is available to California veterans. In 1921, the California legislature enacted the California Veteran Farm and Home Purchase Program, which enabled the California Department of Veterans Affairs to provide eligible veterans with affordable financing to purchase home or farm property. Funding for the program has been provided since the program’s inception through the sale of General Obligation Bonds and Revenue Bonds. The bonds have always been repaid by the veterans who participated in the program and thus there has never been any direct cost to California taxpayers.

I. Eligibility for CalVet Program

Eligibility for Cal-Vet Program The most important change to the new Cal-Vet program is that all veterans who either live in California or who plan to live in California are eligible. The most important change to the new Cal-Vet program is that all veterans who either live in California or who plan to live in California are eligible. 1. No prior residency requirement. Any veteran who moves to California may qualify for a Cal-Vet Loan. 2. Both wartime and peacetime veterans are eligible. 3. Veterans who previously used a Cal-Vet loan may obtain another subject to current eligibility and funding requirements. 4. Loans may be obtained for outright purchase, rehabilitation, or construction.

II. Qualifying and Fees

Qualifying and Fees Cal-Vet now uses the VA underwriting and packaging requirements. Mortgage Insurance is required for loans in which the down- payment is less than 20%. The veteran will also have to provide a VA Certificate of Eligibility. Currently, the maximum loan amount is $521,250 and loans are for a term of 30 years. Currently, the maximum loan amount is $521,250 and loans are for a term of 30 years. Cal-Vet interest rates tend to be stable are subject to a.5% one-time upward increase at any time during the length of the loan. Cal-Vet interest rates tend to be stable are subject to a.5% one-time upward increase at any time during the length of the loan.

(cont.) Down payments are as low as 2%, if VA mortgage insurance is utilized. Down payments are as low as 2%, if VA mortgage insurance is utilized. Private mortgage insurance (PMI) is available with only 3% down. Private mortgage insurance (PMI) is available with only 3% down. Down payment funds may come from any source other than the seller. If the veteran needs help in raising down payment funds, Cal-Vet participates with community housing loan agencies to provide loans for this purpose.

III. Broker Origination

Broker Origination Effective March 1, 2001, veterans were allowed to originate their loans through a Certified Cal-Vet Brokerage Firm. Cal-Vet allows certified mortgage brokers to receive a 1% loan origination fee.

Brokers who wish to participate in the program must comply with the following requirements: 1. Brokers and loan officers must attend a Cal-Vet lending seminar conducted by Cal-Vet personnel. 2. Cal-Vet will only certify mortgage brokerage companies, not individual loan officers. 3. The company must sign a Cal-Vet Mortgage Broker Agreement and send all their loan officer personnel to Cal-Vet training. 4. Certification is “conditional” until the company has originated at least three Cal-Vet loans within 24 months. At that time certification becomes finalized. 5. Only loan officers who work for a certified mortgage brokerage and have attended Cal-Vet training are eligible to receive the 1% origination fee for a Cal-Vet loan. 6. Previous individual certification obtained before March 1, 2001, is now invalid.