The CalVet home loan and the VA home loan programs are the primary home financing options for California Veterans. CalVet and VA both offer Zero Down Financing, but which program is the best for California Veterans? Well, it depends. There are several factors that play into which program is best for your situation. The type of property and the purchase price, as well as your long-term plans for the property, can affect which program is your best option. There are also several differences between each program that have to be considered.
Eligibility for CalVet Home Loan versus a VA Home Loans:
CalVet and VA both have similar eligibility requirements for time served, whether it was during peace time or war time. VA is available to veterans nationwide while CalVet is only available to veterans currently living in California.
CalVet Home Loan:
When you use CalVet for your loan, the property is purchased by CalVet, who then uses a contract of sale to sell the property to the veteran. Equitable title is held by the Veteran who will be occupying the home while CalVet maintains legal title. Through this process Veterans still will have several ownership rights including property tax and mortgage interest deductions. Since CalVet will still hold the legal title, they are able to acquire a group rate for homeowner’s insurance. Since CalVet holds the legal title to your property, it can be very challenging to refinance or obtain a second mortgage in the future. Since CalVet doesn’t refinance their loans, if a Veteran wants to take advantage of lower rates or pull cash out based on increased equity, they will have to refinance out of the CalVet loan. CalVet does serve a niche when it comes to manufactured and/or mobil homes, especially when they are located on leased land. CalVet is the best is the option if the manufactured home is on leased land.
VA Home Loan:
The veteran receives full ownership rights and legal title when using a VA loan, just like most other types of home loan programs. The VA loan program is also much more flexible when it comes to occupying the property. With a VA loan the veteran must initially occupy the property, but after a few years they are able to live elsewhere and rent out the property. With the CalVet program, the Veteran is required to occupy the purchased property as the primary residence until the loan is fully repaid. Another benefit is that VA loans are much easier to refinance. VA also offers the Interest Rate Reduction Refinance Loan (IRRRL), which allows veterans to refinance their loan to lower their interest rate and payment without a new appraisal and without needing to supply income documentation. While a VA loan does allow for financing of manufactured homes there are not many lenders who will fund a VA loan on a manufactured home, especially if it is on leased land.
County VA Loan Limits and Loan Entitlements:
The size of your needed loan will play into which program better suits your needs based on which county you live in. In Orange and Los Angeles counties the current VA loan limit is $679,650 whereas in Riverside County the current loan limit is $453,100. (based on 2018 loan limits for 100% financing) It is also possible to get a Jumbo VA loan that is above the county $0 down loan limit by coming in with a down payment. It is not unusual to have a Jumbo VA loan in the $800,000 to $1,000,000 range.
Understanding your options is critical. Make sure to research both VA and CalVet to make sure you are choosing the right loan program for your needs. And for a detailed loan scenario and video presentation of the loan scenario, contact Tim Storm directly
Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.CaliforniaVALoanExpert.com.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.