August 8, 2012
A reading of the VA Lender’s Guide, which establishes rules for lenders processing home loans for qualified veterans under the VA Loan program, reveals an interesting section titled, “Certificate of Veteran Status – FHA Loans”.
Modified on April 6, 2012 to make minor grammatical edits, this section of the VA loan rulebook pertains directly to veteran borrowers who seek FHA guaranteed home loans.
According to this portion of the VA loan rulebook, “General Section 203(b)(2) of the National Housing Act permits a veteran to obtain slightly better terms than a non-veteran when obtaining Federal Housing Administration (FHA) mortgage financing. Although this involves FHA loans, VA is charged with making the entitlement determination for benefits under this provision.”
How does the VA accomplish this? “VA will issue a VA Form 26-8261, Certificate of Veteran Status, to any eligible veteran-applicant to use when obtaining an FHA loan.”
The lender may help the borrower in this process. Under the section, “How To Apply” you’ll find the following:
“The lender may assist the Veteran in following these procedures:
1 Obtain VA Form 26-8261a, Request for Certificate of Veteran Status, from the VA Eligibility Center.
2 Complete the form as thoroughly as possible. Failure to complete necessary items may cause delays.
3 Attach proof of military service to the form…
4 Submit the form and attachments to the VA Eligibility Center.”
Why would a veteran choose an FHA home loan over a VA mortgage? There are several reasons why some borrowers might decide to go with an FHA guaranteed home loan instead; the VA loan rulebook addresses only one of them for procedural purposes:
“…veterans who apply for VA benefits on VA Form 26-1880 and are found ineligible, may be found eligible for the FHA program. If so, they will be issued an FHA Certificate of Veteran Status concurrent with VA
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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