The VA Loan originated in 1944 through the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt. This feature was designed to provide housing, and home ownership became a reality for millions of veterans.

More than 25 million veterans and service personnel are eligible for VA financing, this loan is attractive and has many advantages. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program.

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

Benchmark 10-year Treasury Hits 3.8%

Rates are going up, up, up back to normal.

The yield on the benchmark 10-year Treasury was rising as the weekend approached with the rate reaching 3.83%, and stoking fears that the refi boom may get clipped. The yield on the 10-year had reached 3.70% during the recent rate spike but then subsequently had been trading in a range below that point. Contributing to the yield's move to a higher range were employment statistics that remained largely negative but included a job loss figure that was not as bad as expected. This adds to evidence that the economic downturn may be slowly decelerating over the next six to nine months as part of a "troughing" process, Credit Suisse chief economist Neal Soss said in a call to investors Friday morning. When it comes to how this affects housing "the most important thing will be mortgage rates" and how rates affect affordability, said Dan Oppenheim, U.S. homebuilders and building products equity analyst at Credit Suisse. However, he said that the increase in rates to date has not hurt affordability.

The VA Jumbo Loan:

On October 10th, 2008 President Obama signed into law the Veterans Benefit Improvement Act of 2008. The law allows $0 down payment VA loans in certain counties to go up to $729,750 for loans closed through December 31, 2011.

The loan amount can be $729,750 but the purchase price can be much higher. For instance a borrower can purchase a home valued at $1,000,000. and put down the difference between the $729,750 and the $1,000,000.

Most counties around the country though are not in a high cost area and will be limited to a loan amount of $417,000.

Ask your loan officer if you are in a high cost or low cost area.

An IRRRL is a VA guaranteed loan made to refinance an existing VA guaranteed loan. Typically the loan is closed at a lower interest rate than the existing VA loan. The new payments should offer a lower principal and interest payments than the existing VA loan.

The one "cash out" exception is the reimbursement of the veteran for the cost of energy efficiency improvements up to $6,000 completed within the 90 days immediately before the date of loan closing.