[kattygirl]

So my husband and I have had absolutely NO LUCK finding a bank to lend to us. My husband was in the military for 13yrs and so we decided to try and get a VA loan. Well we got a paper in the mail saying it was a VA Assurance for 38K. Does anyone know anything about this? Does that mean that a bank will help us now? I have no clue about this stuff and neither does my husband so any advice would be great.

[Dr D]

A VA home loan is made by a bank or a mortgage company. The VA guarantees the loan against loss to the lender in case of foreclosure, up to the amouny of "entitlement" used. The base entitlement is $36,000. The VA will increase this base entitlement as needed, to allow a veteran borrower to buy a home up to the FNMA limit of $417,000 with no money down. VA sets the qualifying guidelines which the lender must follow. This means that you must have "acceptable" credit, income, and job stability per VA guidelines. Find the VA home loan guarantee web site for more information. I hope this helps.

[kattygirl]

So does this mean that even though the VA sent the guarantee that we still won't be able to get a loan? Our credit is not good but we only need 37K for the house we want and I can put 5% down and pay closing costs up front. I am so frustrated. We are trying to make things easier and more affordable for ourselves. We found a home and the payments would be almost 600 a month less than what it costs us to rent.

[Dr D]

FHA and VA are a bit more lenient on credit than Conventional. Even if the computerized underwriter rejects your loan, a human underwriter has the power to overrule the computer. Get in touch with a mortgage lender who does VA loans. Discuss your credit issue with them. If you have unpaid judgments or collections that need to be paid, the money that you have saved could be used for that. On a VA loan you can buy a home with ZERO investment by asking the seller to pay all of your closing costs and prepaid items. If you don't have recent good credit to offset the bad, "alternative credit" can be used; such as timely rent and utility payments. Try to get a referral to a good lender by a friend or relative. Hang in there. If you want a home bad enough, you can get it.

[MrsMac2003]

I just wanted to add my thanks! Your responses, Dr D, have given me the boost I need to go with my husband to apply for a VA loan! I had been very reluctant to do so and now I see it is because I didn't fully understand how it works! Thanks!