2. Eligible Loan Purposes

3. Purchase or Construct a Home Loan may include simultaneous purchase of the land on which the residence is or will be situated Loans for construction of a residence on land already owned by the veteran Property may consist of up to four family units (See Chapter 7.1 of the VA Lenders Handbook for joint loan exceptions.)VA Lenders Handbook Loan may include simultaneous purchase of the land on which the residence is or will be situated Loans for construction of a residence on land already owned by the veteran Property may consist of up to four family units (See Chapter 7.1 of the VA Lenders Handbook for joint loan exceptions.)VA Lenders Handbook

4. Interest Rate Reduction Refinance To refinance an existing VA-guaranteed loan Must lower interest rate and principal and interest payment See Chapter 6, section 1 for guidelines and exceptions.Chapter 6, section 1 To refinance an existing VA-guaranteed loan Must lower interest rate and principal and interest payment See Chapter 6, section 1 for guidelines and exceptions.Chapter 6, section 1

5. Cash-Out/Regular Refinance Pay off any lien against the property VA, FHA, Conventional Tax lien, judgment, etc. Pay other consumer debt Obtain cash Pay off any lien against the property VA, FHA, Conventional Tax lien, judgment, etc. Pay other consumer debt Obtain cash

6. Repair, Alter or Improve Residence To repair, alter or improve a home owned by the veteran and occupied as a home or May be made in conjunction with the purchase of a property. Alterations and repairs must be those ordinarily found on similar properties of comparable value in the community. Reference: Chapter 7, section 4Chapter 7, section 4 To repair, alter or improve a home owned by the veteran and occupied as a home or May be made in conjunction with the purchase of a property. Alterations and repairs must be those ordinarily found on similar properties of comparable value in the community. Reference: Chapter 7, section 4Chapter 7, section 4

7. Repair, Alter or Improve Residence (Continued) Repair, Alter or Improve Residence (Continued) Value consideration The cost of improvements to structures may be added into the loan amount for the purchase of improved property to the extent that their value supports the loan amount. Appraisal would be ordered “as repaired”. Plans and specs would need to be provided to the appraiser. Value consideration The cost of improvements to structures may be added into the loan amount for the purchase of improved property to the extent that their value supports the loan amount. Appraisal would be ordered “as repaired”. Plans and specs would need to be provided to the appraiser.

8. Energy Efficient Mortgage Energy efficient items may be added to any loan type –Purchase –Interest Rate Reduction Refinance –Cash-Out (Regular) Refinance Guidelines and list (not all inclusive) of improvements in Chapter 7, section 3 of the VA Lenders Handbook.Chapter 7, section 3 Energy efficient items may be added to any loan type –Purchase –Interest Rate Reduction Refinance –Cash-Out (Regular) Refinance Guidelines and list (not all inclusive) of improvements in Chapter 7, section 3 of the VA Lenders Handbook.Chapter 7, section 3

9. Condominium The program may be used to purchase a one-family residential unit in a condominium housing development approved by VA. –Reciprocity with HUD approvals in most cases –Reference: Chapter 16-A.02Chapter 16-A.02 The program may be used to purchase a one-family residential unit in a condominium housing development approved by VA. –Reciprocity with HUD approvals in most cases –Reference: Chapter 16-A.02Chapter 16-A.02

10. Cooperative Dwellings VA is authorized to guaranty loans made to veterans for the purchase of stock or membership in co-op housing corporations to enable veterans to occupy as their primary residence. –Reference: VA Circular 26-08-6VA Circular 26-08-6 VA is authorized to guaranty loans made to veterans for the purchase of stock or membership in co-op housing corporations to enable veterans to occupy as their primary residence. –Reference: VA Circular 26-08-6VA Circular 26-08-6

11. Farm Residences VA does not make “farm loans”. However, veterans may purchase a farm on which there is a farm residence. –Value based on acreage using similar comparables with adjustments for differences in site size. –The farmland is appraised at its residential value. –Chapter 11, section 12g, discusses this issue.Chapter 11, section 12g VA does not make “farm loans”. However, veterans may purchase a farm on which there is a farm residence. –Value based on acreage using similar comparables with adjustments for differences in site size. –The farmland is appraised at its residential value. –Chapter 11, section 12g, discusses this issue.Chapter 11, section 12g

12. Ineligible Loan Purposes Purchase of unimproved land, Purchase or construction of dwelling for investment purposes, Purchase of combined residential and business property unless –Property is primarily residential –There is not more than one business unit and –Non –residential area is less than 25% of the total floor area. Purchase of unimproved land, Purchase or construction of dwelling for investment purposes, Purchase of combined residential and business property unless –Property is primarily residential –There is not more than one business unit and –Non –residential area is less than 25% of the total floor area.

13. Ineligible Loan Purposes (Continued) Purchase of more than one separate residential unit or lot unless the veteran will occupy one unit and there is evidence that the residential units: –are unavailable separately, –have a common owner, –have been treated as one unit in the past, –assessed as one unit, or –partition is not practical. Purchase of more than one separate residential unit or lot unless the veteran will occupy one unit and there is evidence that the residential units: –are unavailable separately, –have a common owner, –have been treated as one unit in the past, –assessed as one unit, or –partition is not practical.

14. Ineligible Loan Purposes (Continued) Cash to the veteran* –Only permissible for certain refinancing loans as follows: Interest Rate Reduction Refinance –In the event of change of payoff, computational error, etc. »Up to $500 Cash-out refinance Cash to the veteran* –Only permissible for certain refinancing loans as follows: Interest Rate Reduction Refinance –In the event of change of payoff, computational error, etc. »Up to $500 Cash-out refinance *Ernest money can be refunded to the veteran on a no down payment loan.

15. Reference: Chapter 3, section 2, of the VA Lenders Handbook. –www.warms.vba.va.gov/pam26_7.htmlwww.warms.vba.va.gov/pam26_7.html Chapter 3, section 2, of the VA Lenders Handbook. –www.warms.vba.va.gov/pam26_7.htmlwww.warms.vba.va.gov/pam26_7.html

16. If you have questions, contact your nearest Regional Loan Center. Contact information may be found at www.homeloans.va.gov/rlcweb.htm. www.homeloans.va.gov/rlcweb.htm If you have questions, contact your nearest Regional Loan Center. Contact information may be found at www.homeloans.va.gov/rlcweb.htm. www.homeloans.va.gov/rlcweb.htm

17. Thank you for your interest in the VA Home Loan Program!