PROGRAM KNOWLEDGE BASE

VA Knowledge Base

VA requires more than asking “Are you a veteran?” Learn eligibility, entitlement, occupancy, residual income, funding fee, seller concessions and why VA has no monthly mortgage insurance.

BACK TO PROGRAM MODULE

Program Rules You Must Understand

Down payment

Eligible VA borrowers can often finance 100% of the property's reasonable value/purchase structure when entitlement and other requirements are satisfied; a down payment may still be needed in some scenarios.

Monthly mortgage insurance

VA does not require monthly mortgage insurance.

Funding fee

A one-time VA funding fee generally applies unless the borrower is exempt. Current purchase rates vary by first/subsequent use and down payment; for example, less than 5% down is 2.15% for first use and 3.3% after first use, with lower rates at 5%+ and 10%+ down.

Funding-fee exemption

Certain borrowers, including many receiving qualifying VA disability compensation and other specified categories, may be exempt. Verify status.

Seller concessions

VA seller concessions are generally limited to 4% of reasonable value, but ordinary closing costs and normal discount points are treated separately from the 4% concession definition.

DTI / residual income

VA analysis places significant importance on residual income. A 41% DTI benchmark is commonly relevant, but higher ratios can be acceptable depending on residual income/AUS and full underwriting; do not teach 41% as an absolute cap.

Occupancy

VA purchase financing generally requires eligible occupancy as a home, subject to VA rules.

Eligibility

Military service is only the beginning; Certificate of Eligibility/entitlement and lender/VA requirements must be verified.

Questions to Ask — and Why

QUESTION TO ASK

WHY YOU ASK IT

WHAT THE ANSWER CHANGES

Have you served, and do you have a Certificate of Eligibility?

Service history screens VA; COE/entitlement verifies benefit status.

Determines whether VA can actually be structured.

Are you exempt from the VA funding fee?

Exemption can materially change total loan/cash costs.

Changes loan amount and comparison to other programs.

Will you occupy the property?

VA occupancy rules are central.

Investment-only intent usually changes the program path.

How much cash do you want to preserve?

VA may allow zero down, but borrower strategy matters.

Helps compare zero-down vs voluntary down payment and funding-fee tiers.

What seller assistance is negotiated?

VA distinguishes normal closing costs from concessions.

Determines whether the 4% concession limit is implicated.

What are family size, income and obligations?

Residual income is a key VA underwriting concept.

May make a file stronger or weaker even when DTI looks similar.

Worked Training Example

On a $300,000 first-use VA purchase with less than 5% down and no exemption, a 2.15% funding fee would be $6,450. VA permits the funding fee to be financed, subject to current program rules. An exempt veteran would not pay that fee.

Important: A training example is not an approval. Always verify current agency/investor/lender guidance, AUS findings and overlays before representing a rule as final.

What a New LO Should Be Able to Explain

After studying this program, the trainee should be able to explain the minimum-investment concept, seller-contribution limits, insurance/fee structure, occupancy, ratio philosophy, key eligibility questions, documentation triggers and why this program may or may not fit a borrower.