VA Direct Home
Loans for Native American Veterans
Living on Trust Lands (On-Line Version)
WHO IS ELIGIBLE?
VA direct home loans are available to
eligible Native American veterans who wish to
purchase or construct a home on trust lands. Details
on the military service requirements are spelled out
below.
WHAT CAN THE LOAN BE USED FOR?
A VA direct loan can be used to purchase, construct,
or improve a home on Native American trust land.
These loans may also be used to simultaneously
purchase and improve a home or to refinance another
VA direct loan made under this program in order to
lower the interest rate. VA direct loans are
generally limited to the cost of the home, or the
Federal Home Loan Mortgage Corporation single-family
conforming loan unit, whichever is less. Contact a
VA office with loan activities for information
regarding the current loan limit and any other
questions you may have concerning VA direct home
loans.
The addresses and toll
free numbers of the VA office servicing your area
can be found at the bottom of this page.
FIVE EASY STEPS TO A VA LOAN
- Make sure that your tribal organization or other appropriate Native American group is participating in the VA direct loan program. The tribal organization must have signed a Memorandum of Understanding with the Secretary of Veterans Affairs, which includes the conditions governing its participation in the program.
- Apply for a Certificate of Eligibility. A veteran who doesn’t have a certificate can easily obtain one by completing VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan. This form should be mailed to the VA Eligibility Center, P.O. Box 20729, Winston-Salem, N.C. 27120. To contact the VA Eligibility Center, call toll free 1-888-244-6711.
- Decide on a home to buy and sign a purchase agreement or a contract with the builder to build the home. Make sure to include in the contract a provision that makes the contract void if you are unable to obtain a VA direct loan.
- Contact either your local housing authority or VA to apply for the loan. An appraisal of the property will be ordered, and you will be asked to provide information needed to verify your income and credit history.
- Close the loan and move into your new home.
HOW TO GET A VA DIRECT LOAN
Who is Eligible?
Veterans who were honorably released from active
duty service, during World War II and later periods
are eligible for VA loan benefits. World War II
(September 16, 1940 to July 25, 1947), Korean
conflict (June 27, 1950 to January 31, 1955), and
Vietnam-era (August 5, 1964 to May 7, 1975) veterans
must have at least 90 days service. Veterans with
service only during peacetime periods and active
duty military personnel must have had more than 180
days active service. Veterans of enlisted service
that began after September 7, 1980, or officers with
service beginning after October 16, 1981, must in
most cases have served at least 2 years.
Persian Gulf Conflict. Basically, reservists
and National Guard members who were activated on or
after August 2, 1990, served at least 90 days and
were honorably released from the period of
activation are eligible.
Reservists. Members of the Selected Reserve,
including the National Guard, who are not otherwise
eligible and who have completed 6 years of service
and have been honorably discharged or have completed
6 years of service and are still serving, are
eligible. Ask VA about what is needed to establish
eligibility. Reservists will pay a slightly higher
funding fee than regular veterans. (See paragraph
entitled "Costs of Obtaining a VA Direct Loan.")
VA DETERMINATION OF REASONABLE VALUE
The maximum loan amount may not exceed VA's estimate
of the reasonable value of the property to be
purchased. A qualified appraiser assigned by VA will
perform the appraisal and make this determination.
An application fee, collected from the veteran at
the time of loan application, will be used to pay
for the cost of the appraisal and for other expenses
connected with the processing of the loan.
It is important to recognize that VA does not
guarantee the value or condition of the property.
Homebuyers should carefully inspect the property
themselves, or have it inspected by a reputable
inspection firm.
Loan Application
Contact either your local housing authority or VA to
apply for the loan. The party processing the loan
verifies the applicant's income and assets, and
obtains a credit report to see that other
obligations are being paid on time. If VA office
reviewing the package determines that all is well
and the appraised value of the property is enough to
cover the loan needed, the loan will be approved and
a date set for loan closing.
REQUIREMENTS FOR LOAN APPROVAL
To obtain a VA direct loan, the law requires that:
- The applicant must be an eligible Native American veteran who has available entitlement.
- The tribal organization or other appropriate Native American group must be participating in the VA direct loan program. The tribal organization must have signed a Memorandum of Understanding with the Secretary of Veterans Affairs, which spells out the conditions under which the program will operate on its trust lands.
- The loan must be to purchase, construct, or improve a home on Native American trust land. Individually allotted land is considered trust land for this purpose.
- The veteran must occupy the property as his or her home; a loan for rental or investment purposes is not permitted.
- The veteran must be a satisfactory credit risk.
- The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the other costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.
- All prospective applicants are encouraged to first contact either their local housing authority or VA to discuss their financial situation and obtain a general idea of whether or not they might qualify for a home loan.
COSTS OF OBTAINING A VA DIRECT LOAN
- A funding fee of 1.25 percent must be paid to VA unless the veteran is receiving compensation because of a service-connected disability. In the case of veterans who qualify based on service in the Reserves or National Guard, which was not active duty, the funding fee is 2 percent of the loan amount. The funding fee may be paid in cash or it may be included in the loan.
Other closing costs may not be included in the loan. Closing costs may vary because of differing local laws and customs. The following items may be paid by the veteran purchaser, the seller, or shared:
- VA appraisal
- Credit report
- Loan processing fee of up to $300 to a party who processes your loan
- Title search and title insurance or other title review fee
- Recording fees
- State and/or local transfer taxes, if applicable,
- Survey
- Hazard insurance premium
No commissions, brokerage fees,
finders fees, or "buyer broker" fees may be charged
to the veteran buyer.
NEED MORE INFORMATION?
Veterans seeking more detailed information
concerning the VA direct loan program should contact
their local housing authority or VA. Loan Guaranty
personnel at VA will be pleased to answer specific
questions and provide any other assistance they can.
If you are a Native American veteran interested in
obtaining or improving a home on trust land, or know
of someone who is, it makes sense to look into the
VA direct loan program as a good way to finance a
home purchase.
VA Offices with Loan Activities