Correspondent VA and VA IRRRL Products

Page 1 7.1.2014

Topic Product Guideline

Program

Description

This is base VA mortgage parameters for primary residence only. The borrower must be a veteran with

eligibility documented with a Certificate of Eligibility, which indicates the Veteran’s Entitlement. These

products adhere to the automated underwriting systems “Loan Prospector” and “Desktop Underwriter”

along with overlays that are created to the secondary market.

Do not run AUS on the VA IRRRL product

Products VA 30 yr fixed, 25 yr fixed, 20 yr fixed, 15 yr fixed, and 10 yr fixed

VA 5/1 arm

AUS method These products adhere to the automated underwriting systems “Loan Prospector” and “Desktop

Underwriter” along with overlays that are created to the secondary market. Loans must have a result of

DU “Approve/Eligible” or LP “Accept”

Manual underwrite is permitted on the loans receiving a “Refer/Eligible” status – refer to the manual

underwriting guide

Program Codes VA51T10, and VA51TJ10

VF3010, VF2510, VF2010, VF1510, VF1010, and VF30HP10 (High Priced), VF30IR10, VF30IRHP10

(High Priced),VF25IR10, VF20IR10, VF15IR10, VF10IR10, VF30J10, VF25J10, VF20J10, VF15J10,

VF10J10, VF30JIR10, VF25JIR10, VF20JIR10, VF15JIR10, and VF10JIR10

Manual Underwrite:

VF30MU10, VF30JMU10, VF30MUHP10, VF15MU10, and VA51TMU10

Eligible States All continental states, Alaska, and Hawaii

Geographic restrictions are listed under property types

Maximum

Conforming Loan

Amounts

(This is inclusive of

Funding fee)

VA Guaranty must

cover at least 25%

of the total loan

amount

Continental U.S

1-Unit: 417,000

2-Unit: 533,850

3 Unit: 645,300

4 Units: 801,950

1-Unit includes Condos and PUDs

VA Loan Limits by geographic region can be located at: Current

VA Loan Limits

Greater than $650,000 requires management review

Alaska and Hawaii

1-Unit: 625,500

2-Unit: 800,775

3 Unit 967,950

4 Units: 1,202,925

1-Unit includes Condos and PUDs

VA Loan Limits by geographic region can be located at:

Current VA Loan Limits

Greater than $650,000 requires management

review

Maximum Jumbo

Loan Amounts

(This is inclusive of

Funding fee)

Continental U.S

1-Unit: 625,500

2-Unit: 800,775

3 Unit: 967,950

4 Units: 1,202,925

1-Unit includes Condos and PUDs

VA Loan Limits by geographic region can be located at: Current

VA Loan Limits

Greater than $650,000 requires management review

Alaska and Hawaii

1-Unit: 938,250

2-Unit: 1,201,150

3 Unit 1,451,925

4 Units: 1,804,375

1-Unit includes Condos and PUDs

VA Loan Limits by geographic region can be located at:

Current VA Loan Limits

Greater than $650,000 requires management

review

Correspondent VA and VA IRRRL Products

Page 2 7.1.2014

Maximum Fixed

LTV/CLTV

Standard and

Jumbo loan

amounts

Texas Equity 50 (a)

(6) is not available

Maximum ARM

LTV/CLTV

Standard loan

amounts only

Texas Equity 50 (a)

(6) is not available

Primary

Purchase

1-4 Units: 100/100%

Rate and Term Refi*

N/A

Cash Out Refi

1-4 Units: 100%/125%

______________________

Primary

Purchase

1-4 Units: 100/100%

Rate and Term Refi*

N/A

Cash Out Refi

1-4 Units: 90/90%

Second Home

Purchase

N/A

Rate and Term Refi*

N/A

Cash Out Refi

N/A

____________________ ___

Second Home

Purchase

N/A

Rate and Term Refi*

N/A

Cash Out Refi

N/A

Investment/Non-Owner

Purchase

N/A

Rate and Term Refi*

N/A

Cash Out Refi

N/A

_______________________

Investment/Non-Owner

Purchase

N/A

Rate and Term Refi*

N/A

Cash Out Refi

N/A

Refinance Note *Veteran has a conventional loan and is refinancing to a VA loan – no cash in hand

90.01 – 100% - no cash in hand – debt consolidation only

Funding Fee Veteran is required to pay the VA Funding Fee and it can be included in the loan amount

Loan Type Funding Fee Reservist Funding Fee

Purchase Loan - Zero Down* 2.15% 2.40%

Purchase Loan - 5% Down 1.50% 1.75%

Purchase Loan - 10% Down 1.25% 1.50%

Cash-Out Refinance Loan* 2.15% 2.40%

IRRRL .50% .50%

*Re – use – 3.3%

The following persons are exempt from paying the funding fee:

Veterans receiving VA compensation for service-connected disabilities.

Veterans who would be entitled to receive compensation for service-connected

disabilities if they did not receive retirement pay.

Veterans who are rated by VA as eligible to receive compensation as a

result of pre-discharge disability examination and rating or on the basis of a

pre-discharge review of existing medical evidence (including service

medical and treatment records) that results in issuance of a memorandum

rating.

Veterans entitled to receive compensation, but who are not presently in

receipt because they are on active duty.

Correspondent VA and VA IRRRL Products

Page 3 7.1.2014

Surviving spouses of veterans who died in service or from service connected

disabilities (whether or not such surviving spouses are veterans

with their own entitlement and whether or not they are using their own

entitlement on the loan).

Verification of exempt status must be obtained by one of the following:

a properly completed and signed VA Form 26-8937, Verification of VA

Benefits, indicating the borrower’s exempt status,

for a veteran who elected service retirement pay instead of VA

compensation, a copy of the original VA notification of disability rating and

documentation of the veteran’s service retirement income, or

indications on the Certificate of Eligibility (COE) that the borrower is

entitled as an unmarried surviving spouse.

Consult VA if the borrower’s status is unclear after reviewing the appropriate documents

Minimum Credit

Score Purchase/ Rate and Term/ IRRRL 500 min credit score

Purchase/IRRRL > $1 mil ≤ $1.5 mil min score 700

Cash-out 500 min credit score

Cash-out > $700k ≤ $1 mil min score 660

Cash-out > $1 mil ≤ $1.5 mil min score 700

Credit scores for all transactions with FICOs < 600 require AUS Approval. No Manual

Underwrites.

Minimum Loan

Amount

$50,000

Borrower Eligibility Must be a veteran who served the minimum duty with other than a dishonorable discharge

Active duty with at least 181 days of duty

Un-remarried surviving spouse of eligible veteran (COE)

Reservists/National Guard

Certificate of Eligibility must have sufficient entitlement to meet minimum 25% guarantee

Resident alien permitted as long as primary borrower is a veteran

Joint loans involving two unmarried veterans – veteran borrower plus spouse co-borrower is

not considered a joint loan – Must be sent to VA for approval

Refinance-Listed

Property

Properties currently listed for sale are ineligible for financing

Cash-out properties listed for sale within the previous 6 months are ineligible

IRRRL Last Page

Refinance-Cash Out Properties currently listed for sale are ineligible for financing

Permitted when there is greater than 6 months of ownership/title

No maximum on dollar amount on cash out – must be an existing lien against the property

Texas Equity 50 (a) (6) not eligible

Eligible Property

Types

Detached/Attached SFR and PUDs, VA Approved Condos –Link to VA Approved Condo, Factory Built

-Modular/Pre-Cut/Panelized Housing covered by the HUD Structural engineering bulletin, and 2-4 Unit

properties

Ineligible Property

Types

Non-VA Approved Condos, Condotels, Manufactured Housing, Co-op, Mixed-Use, Dome, Straw/Bale,

Log, Earth, Working Farms/Ranches, Mobile Homes, Commercial (income producing), VA Indian

Leasehold properties, Energy Efficient Loans, Life Estates, and Construction properties

Correspondent VA and VA IRRRL Products

Page 4 7.1.2014

Special Property

Types

Leasehold Estates: Permitted if marketable for area, and lease term require underwriting manager’s

approval

Deed Restrictions: Permitted if marketable for area, and require prior approval by VA

IL Land Trust is an institutional corporate entity; individuals are not acceptable. Beneficiary must

execute Note and Guarantee Payment of Mortgage

Newly completed construction properties (completed less than 1 yr and never owner occupied) follow

VA guidelines.

Rural Properties:

They are generally acceptable with the following conditions:

Maximum 40 acres.

Non-income producing only.

The appraisal and comparables must support the land/site-to-value ratio. The appraiser must

determine if the property’s land/site-to-value ratio is typical for the area.

The land is to be considered residential and not for potential future development.

Recast Option N/A

Prepayment Penalty

Option

N/A

Conversion option N/A

Terms Fixed :360 months, 300 months, 240 months, 180 months, and 120 months

ARM: 360 months

Amortization Fully Self amortizing,

Buy down,

Temporary

Not Permitted

Special Features

and Specifications

Construction to Perm post construction financing allowed. (Single close construction loans ineligible.)

Revocable Inter-Vivos trust: Permitted on Underwriting management approval

HPML: Permitted 30yr only

MCCs: Loans with an MCC are permitted and the certificate must be obtained prior to close. CalHFA

MCC is not eligible for use.

Escrow Waiver Not Available – Escrows Required

Assumability On arms only. 3/1 arm any time, all other ARMs post fixed rate period

Fixed: not permitted

Underwriting

Procedure

Run DU or LP For approval

No non-traditional credit

Tax Deductions – Use this calculator

Principal

Curtailment

A refund is appropriate if an exempt veteran paid a funding fee, or a miscalculation of the fee caused an

overpayment. If the veteran was overcharged, the following applies:

A veteran who paid cash for the funding fee received a cash refund for the amount of the

overpayment

In the case of a veteran who paid the funding fee out of loan proceeds, the lender must apply

the overpayment against the loan balance. Submit evidence to VA that the refund was applied

to the loan’s principal balance.

Documentation Full Documentation

Correspondent VA and VA IRRRL Products

Page 5 7.1.2014

Requirements Standard VA documents apply

Tax Transcripts are required for the number of years of income documented required by AUS

Credit History Acceptable credit history determined by AUS

0x30 mortgage lates in the recent 12 months

Bankruptcy, Foreclosures, and Deed-in-Lieu must be recognized by the DU AUS system.

Event Waiting Period

BK 7 or 11 2 years

BK 13 On AUS Accept/Approve

Permitted with a min of 12

months timely payments on

the payout and a court

approval to enter into a

mortgage transaction

Foreclosure 2 years

Deed-in-Lieu, Pre-

foreclosure, Short Sale

2 years

Mortgage Insurance No mortgage Insurance is required regardless of LTV on a VA loan.

Subordinate

Financing

Permitted for closing costs and/or down payment, but must conform to the above CLTV limitations.

Texas – Payoff of subordinate financing used for purchase or home improvements or the subordination

of a second can be done as long as the first mortgage was not a home equity/cash-out Section 50(a)(6)

loan

No negative amortization on the subordinate financing. The repayment terms of the

subordinate must provide for regular payments that cover no less than interest due.

The interest rate on the subordinate should be less than the rate on the first

Should not restrict the Veteran from selling the property

No cash back to borrower

Project Eligibility Condominium: Must meet VA Criteria.

https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch

Co-ops: Not Permitted

Appraisal Standard Full Appraisal is required

All Appraisals must be ordered by the Appraisal order desk

• The standard VA Appraisal is required including interior and exterior of the subject property

• The notice of value is issued by VA and valid for 6 months – rapidly changing market conditions could

dictate the use of a shorter validity period

Qualifying Ratios Maximum Qualifying Ratio: AUS determination

AUS Refer loans – 41%

AUS Refers will be reviewed and considered on a case by case basis

Any allotments reflected on the LES or paystubs must be investigated to determine if the allotment has

an affiliate debt

In community property states – the non borrowing spouse’s debts and obligations must be considered in

qualifying ratios

Correspondent VA and VA IRRRL Products

Page 6 7.1.2014

Residual Income qualification:

For loan amounts below 80,000

FAMILY SIZE* NORTH EAST MIDWEST SOUTH WEST

1 $ 390 $3 82 $ 382 $ 425

2 $ 654 $ 641 $ 641 $ 713

3 $ 788 $ 772 $ 772 $ 859

4 $ 888 $ 868 $868 $ 967

5 $ 921 $ 902 $ 902 $ 1004

*Add $ 75 for each additional member up to a family of 7

For loan amounts of 80,000 and above

FAMILY SIZE* NORTH EAST MIDWEST SOUTH WEST

1 $ 450 $441 $ 441 $ 491

2 $ 755 $ 738 $ 738 $ 823

3 $ 909 $ 889 $ 889 $ 990

4 $ 1025 $ 1003 $ 1003 $ 1117

5 $ 1062 $ 1039 $ 1039 $ 1158

*Add $ 80 for each additional member up to a family of 7

Contributions to

Closing Costs

Contributions may not exceed 4% of the value of the property as indicated on the NOV (Notice of

Value)

Normal discount points and payments of buyer's closing costs will not be considered a concession for

purposes of determining total concession

Down Payment/Gift

Rules

Minimum Borrower Contribution: No minimum

Gift Funds: Permitted

Reserves Per AUS findings.

Non-Occupying Co-

Borrower

Not Permitted

Trailing Co-

Borrower

Not permitted

Foreign Borrower Non residents not permitted

Multiple Properties No limit

Correspondent VA and VA IRRRL Products

Page 7 7.1.2014

VA IRRRL

Maximum Fixed

LTV/CLTV

Standard and

Jumbo loan

amounts

Primary

1-4 Units 125/125%

Second Home

1 Unit: 105/105% with certification of previous

occupancy

Investment/Non-Owner

1 Unit: 105/105% with certification of previous

occupancy

Maximum ARM

LTV/CLTV

Standard loan

amounts only

Primary

1-4 Units 90/90%

Second Home

N/A

Investment/Non-Owner

N/A

IRRRL Follow VA standard underwriting guidelines.

The IRRRL may only include the following:

Texas – R/T originated to pay off an existing home equity/cash-out mortgage is ineligible

Maximum cash back to the borrower is limited to $500 Per Ch 6 Sec F VA Lenders Handbook

The payoff of the outstanding VA loan balance of an existing first mortgage.

Secondary financing must re-subordinate to the new first mortgage within the CLTV limits

listed in the maximum LTV/CLTV section of these guides

0x30 in the last 12 months on all mortgages

DTI is not calculated

HVE or LPS AVM, and VECTOR AVM permitted, or

Conventional 2055 Exterior Appraisal. Health/safety repairs must be completed. Property

must be rated Average Condition or better.

LTV >95% and a Loan Amount >$1MM must have a minimum full appraisal

The borrower must be the same except:

o The addition of a new spouse

The P&I on the IRRRL must be less than the loan being refinanced unless:

o The IRRRL is refinancing and ARM

o Term of the IRRRL is shorter than the term of the loan being refinanced

o The PITI increases by 20% or more; loan must credit qualify

HPML

Allowed only with complete credit qualifying

Anything not specifically addressed here, follow the VA guidelines