Military Relocation and VA Lending Fundamentals
What this domain tests
You need a working vocabulary of the VA Home Loan benefit and the relocation system that surrounds it. Know the actors (VA, lender, servicer, appraiser, title company, closing agent), the core loan features, and the consumer protections that shape every transaction.
Core concepts
- Entitlement: VA guarantees a portion of the loan. Basic entitlement is a fixed dollar figure per veteran; the guaranty is a percentage of the loan, capped by the entitlement available. A veteran with full entitlement and no prior use can often buy with no down payment.
- Second-tier (remaining) entitlement: A veteran with a prior VA loan still active may have partial entitlement left, which typically requires a down payment to satisfy the lender's required guaranty.
- Occupancy: The veteran generally must certify intent to occupy as a primary residence within a reasonable time after closing. This is a favorite trap: investment and second-home use do not qualify.
- Funding fee: A percentage of the loan, varying by down payment, first vs. subsequent use, and certain exemptions (e.g., service-connected disability). It can be financed.
- VA appraisal (Notice of Value): Establishes value and confirms Minimum Property Requirements. It is not a home inspection and does not guarantee condition.
- Escape clause: The VA borrower may withdraw if the Notice of Value comes in below the contract price.
- Residual income and AUS: VA underwriting emphasizes residual income after debts and typical living costs, plus compensating factors.
Traps
Questions blur appraisal with inspection, treat the funding fee as universal, and assume entitlement is unlimited. Read for "full" vs. "remaining" entitlement and for occupancy intent.
Rule of thumb
If the question involves a veteran who still owns a home with an active VA loan, assume remaining entitlement and expect a down payment discussion until told otherwise.