Principles of California Real Estate

Lesson 10: Lesson 10:

Applying for a Applying for a Residential LoanResidential Loan

Principles of California Real Estate

Applying for a Residential Loan

This lesson will cover four topics:choosing a lenderthe loan application processbasic loan featuresresidential financing programs

Choosing a LenderTypes of lenders

Buyers may choose the type of lender they want, although most distinctions between mortgage lenders no longer exist.

Choosing a LenderTypes of lenders

Buyers may choose the type of lender they want, although most distinctions between mortgage lenders no longer exist.

The types of lenders include:savings and loanscommercial bankssavings bankscredit unionsmortgage companies

Types of LendersSavings and loans

Savings and loans: emphasize home purchase loans

Types of LendersSavings and loans

Savings and loans: emphasize home purchase loansget most of their loan funds from the

savings of individuals

Types of LendersCommercial banks

Commercial banks:traditionally made short-term business

loans

Types of LendersCommercial banks

Commercial banks:traditionally made short-term business

loansnow accept more long-term deposits and

offer more long-term loans

Types of LendersSavings banks

Savings banks:are owned by small depositors rather than

stockholders

Types of LendersSavings banks

Savings banks:are owned by small depositors rather than

stockholdersare relatively rare today

Types of lendersCredit unions

Credit unions:serve only members of a particular group

Types of lendersCredit unions

Credit unions:serve only members of a particular groupspecialize in small personal loans

Types of lendersMortgage companies

Mortgage companies:are not depository institutions


Mortgage companies:are not depository institutionsact as loan correspondents (an

intermediary between an investor with money to lend and a home buyer looking for financing)




act on behalf of large investors




act on behalf of large investorsmake the most mortgage loans


Mortgage companies:sell their loans to investors on the

secondary market


Mortgage companies:sell their loans to investors on the

secondary marketoften service the loan for a fee

Mortgage company ≠ Mortgage broker


Mortgage company ≠ Mortgage broker

A mortgage broker simply arranges loans, bringing borrowers and lenders together for a commission.


Types of LendersSeller financing

Seller financing: When the seller extends credit to the buyer. (Most important source of private financing.)


Seller financing: When the seller extends credit to the buyer. (Most important source of private financing.)

Seller financing is important when:buyer’s income is inadequate interest rates are highbuyer has poor credit history

The buyer makes a downpayment and then gives the seller a mortgage, deed of trust, or land contract for the rest of the price.


The buyer makes a downpayment and then gives the seller a mortgage, deed of trust, or land contract for the rest of the price.

Alternately, the buyer may finance much of the purchase price through an institutional lender and finance the rest through the seller (this is called secondary financing).


SummaryChoosing a Lender: Types of Lenders

Savings and loans Commercial banks Savings banks Credit unions Mortgage companies Mortgage brokers Seller financing

Choosing a LenderLoan costs

Buyers also want to compare loan costs when choosing a lender.

Choosing a LenderLoan costs

Buyers also want to compare loan costs when choosing a lender.

Loan costs include:interest chargesorigination feesdiscount pointslock-in fees

Loan CostsOrigination fees

Origination fee: An administrative charge for processing the loan.


Origination fee: An administrative charge for processing the loan. The fee is paid at closing.


Origination fee: An administrative charge for processing the loan. The fee is paid at closing. Also known as a loan fee, service fee, or

administrative charge.

Loan CostsDiscount points

Discount points: A fee paid to the lender at closing to increase the lender’s yield (or profit) on the loan.


Discount points: A fee paid to the lender at closing to increase the lender’s yield (or profit) on the loan.

One point is equal to 1% of the loan amount. Two points are equal to 2% of the loan amount.

The more discount points a borrower pays, the lower the interest rate will be.



The seller may choose to pay the buyer’s discount points to lower the buyer’s interest and make the loan more affordable.



The seller may choose to pay the buyer’s discount points to lower the buyer’s interest and make the loan more affordable.This is known as a buydown.


Loan CostsLock-ins

Lock-in fee: A fee paid to the lender by the buyer to ensure that the interest rate will be guaranteed for a certain period.

Loan CostsLock-ins

Lock-in fee: A fee paid to the lender by the buyer to ensure that the interest rate will be guaranteed for a certain period.Without a lock-in, the lender may change

the loan’s interest rate at any point before closing.

Loan CostsTruth in Lending Act

The Truth in Lending Act (TILA) is a federal consumer protection law that requires lenders to disclose the total cost of obtaining a loan.


The Truth in Lending Act (TILA) is a federal consumer protection law that requires lenders to disclose the total cost of obtaining a loan.

TILA is implemented through Regulation Z, a Federal Reserve regulation.

TILA applies to consumer loans: used for personal, family, or household

purposes



purposespaid off in more than four installments or

involving finance charges



purposespaid off in more than four installments or

involving finance chargesfor $25,000 or less or secured by real

property



TILA does NOT apply to:loans made to corporations or

organizations



organizationsloans made for business, commercial, or

agricultural purposes



organizationsloans made for business, commercial, or

agricultural purposesseller-financed transactions


If a loan is covered by TILA, the lender must disclose the loan’s:total finance charge


If a loan is covered by TILA, the lender must disclose the loan’s:total finance chargeannual percentage rate (APR)


Total finance charge: The sum of all fees the borrower will have to pay, including interest, origination fees, discount points, service fees, mortgage insurance premiums.


Total finance charge: The sum of all fees the borrower will have to pay, including interest, origination fees, discount points, service fees, mortgage insurance premiums.

The finance charge does NOT include seller-paid points, appraiser fees, or credit report fees.


Annual percentage rate (APR): The cost of the loan expressed as an annual percentage of the loan amount.


Annual percentage rate (APR): The cost of the loan expressed as an annual percentage of the loan amount.

The APR (also called the effective interest rate) is a more accurate way to compare loan costs than by comparing nominal rates (the interest rates stated on the promissory notes).


TILA advertising rules:an advertisement can list the cash price or

APR without triggering full disclosure requirements




if an ad goes beyond those terms, it must also disclose: the required downpayment




if an ad goes beyond those terms, it must also disclose: the required downpayment the points




if an ad goes beyond those terms, it must also disclose: the required downpayment the points terms of repayment (i.e., loan balance

and total number of payments)


TILA also: requires a good faith estimate of closing

costs to be given to the borrower within three days of the loan application date




gives home equity borrowers a right of rescission




gives home equity borrowers a right of rescissionThe borrower has three days to change

her mind after signing the loan agreement.

Loan Costs Mortgage Loan Broker Law

California’s Mortgage Loan Broker Law requires real estate agents who act as loan brokers to give borrowers a disclosure statement.


The disclosure statement must list:all costs involved in obtaining the loan


The disclosure statement must list:all costs involved in obtaining the loanthe amount the borrower will actually

receive after all costs have been deducted


The disclosure statement must be given to the borrower:before the borrower signs the loan papers,

or



orwithin three days of receiving the loan

application, whichever is earlier.



orwithin three days of receiving the loan

application, whichever is earlier.

The agent must keep a copy of the statement for three years.


The law also:prohibits balloon payments for certain

loans


The law also:prohibits balloon payments for certain

loans

limits the size of commissions and fees that can be charged for: first deeds of trust for less than $30,000 junior deeds of trust for less than

$20,000

Loan Costs Seller Financing Disclosure Law

California’s Seller Financing Disclosure Law applies to seller-financed loans if:the loan is for a residential property of up

to four units



to four unitsthe financing calls for a finance charge or

more than three payments



to four unitsthe financing calls for a finance charge or

more than three paymentsan arranger of credit is involved in the

transaction


Arranger of credit: A person who is involved in negotiating a credit agreement, such as a real estate agent who helps arrange seller financing.


The law requires the following disclosures to be made to the borrower:the terms of the note and security

instrument



instrumenta description of any senior encumbrances



instrumenta description of any senior encumbranceswhether a balloon payment is required



instrumenta description of any senior encumbranceswhether a balloon payment is requiredemployment, income, and credit

information about the buyer

SummaryChoosing a Lender: Loan Costs

Origination fee Discount points Lock-in Truth in Lending Act Total finance charge Annual percentage rate Mortgage Loan Broker Law Seller Financing Disclosure Law

Applying for a Residential LoanLoan application process


Loan Application Process

Once a lender is chosen, the buyer fills out the loan application. This may be done:after a property has been chosen

Loan Application Process

Once a lender is chosen, the buyer fills out the loan application. This may be done:after a property has been chosenbefore the buyer begins looking for a home

(called prequalification)

Loan Application ProcessRequired information

The buyer will need to give the lender the following:personal information (such as age and

education)current monthly housing expensesemployment information

Loan Application ProcessRequired information

The buyer will need to give the lender the following:personal information (such as age and

education)current monthly housing expensesemployment informationcurrent incomeassets and liabilitiestype of loan sought

Loan Application ProcessUnderwriting

The lender will evaluate the completed application according to the lender’s qualifying standards (called underwriting the loan).


The lender will evaluate the completed application according to the lender’s qualifying standards (called underwriting the loan).

The loan underwriter will assess the degree of risk the loan would create and decide whether the loan should be approved.


Underwriters focus on three main considerations about the borrower:incomenet worthcredit history

UnderwritingIncome

The underwriter checks to see if the applicant has enough stable monthly income to make the loan payments.

UnderwritingIncome

The underwriter checks to see if the applicant has enough stable monthly income to make the loan payments.

She will consider the:qualityquantity anddurability of the applicant’s income

Quality and durability of income:income from a permanent job, or regular

benefits such as Social Security, will be considered stable income

Underwriting Income

Quality and durability of income:income from a permanent job, or regular

benefits such as Social Security, will be considered stable income

earnings from a temporary job are not stable income

Underwriting Income

Quantity of income:The underwriter uses income ratios to

determine whether the applicant’s income is enough.

Underwriting Income

Quantity of income:The underwriter uses income ratios to

determine whether the applicant’s income is enough.

There are two ratios:a housing expense to income ratioa debt service to income ratio

Underwriting Income

Underwriting Net worth

The borrower’s net worth is determined by subtracting her total liabilities from total assets.

Underwriting Net worth

The borrower’s net worth is determined by subtracting her total liabilities from total assets.An applicant must have enough funds to

pay for the downpayment and closing costs while retaining at least several months’ reserves.

Underwriting Credit history

The underwriter will also consider the applicant’s credit history, including factors such as:late payments on debtsbankruptciesforeclosures

Underwriters typically use credit scores to evaluate the borrower’s likelihood of defaulting on a loan.


Underwriters typically use credit scores to evaluate the borrower’s likelihood of defaulting on a loan.Credit scores are issued by credit

reporting agencies.


Underwriters typically use credit scores to evaluate the borrower’s likelihood of defaulting on a loan.Credit scores are issued by credit

reporting agencies.California law entitles consumers to

receive a copy of their credit information upon request.


Underwriting Qualifying the property

The underwriter also evaluates the property, to make sure it provides adequate security for the loan amount.

Underwriting Qualifying the property

The underwriter also evaluates the property, to make sure it provides adequate security for the loan amount.The underwriter does this with an

appraisal report.

SummaryLoan Application Process

Prequalifying Loan application Stable monthly income Income ratios Net worth Credit history

Applying for a Residential LoanBasic loan features


Basic Loan Features

Basic loan features include:the loan termamortizationloan-to-value ratiossecondary financingfixed or adjustable interest rates

Basic Loan FeaturesLoan term

Loan term: How long a borrower has to repay a loan (also called repayment period).


Loan term: How long a borrower has to repay a loan (also called repayment period).

The loan term affects the amount of the monthly payment and the amount of interest paid over the life of the loan.


Common loan terms:30-year: Main advantage is smaller

monthly payment. (Most loans have a 30-year term.)


Common loan terms:30-year: Main advantage is smaller

monthly payment. (Most loans have a 30-year term.)

15-year: Bigger monthly payment, but borrowers get a lower interest rate, pay off the loan in half the time, and pay much less interest overall.

Basic Loan FeaturesAmortization

Amortized loan: A loan that requires regular installment payments of both principal and interest.


Amortized loan: A loan that requires regular installment payments of both principal and interest. Fully amortized loan: The monthly

payments will pay off the entire debt at the end of the loan term.


Amortized loan: A loan that requires regular installment payments of both principal and interest. Fully amortized loan: The monthly

payments will pay off the entire debt at the end of the loan term.

Partially amortized loan: The monthly payments won’t be enough to pay off the entire debt; the borrower will owe a balloon payment at the end of the term.

Basic Loan FeaturesLoan-to-value ratios

Loan-to-value ratio (LTV): The relationship between the loan amount and the value of the security property, expressed as a percentage.


Loan-to-value ratio (LTV): The relationship between the loan amount and the value of the security property, expressed as a percentage.

An $80,000 loan on a property worth $100,000 would have an 80% LTV.

The lower the LTV, the greater the buyer’s equity in the property.


The lower the LTV, the greater the buyer’s equity in the property.

Equity is the difference between the property’s value and any liens against it.


Lenders prefer a lower loan-to-value ratio because:the borrower makes a larger investment

and will try harder to avoid foreclosure


Lenders prefer a lower loan-to-value ratio because:the borrower makes a larger investment

and will try harder to avoid foreclosurein there is a foreclosure sale, the lender is

likelier to be able to recover the entire debt


Basic Loan FeaturesSecondary financing

Buyer may take out a second mortgage loan to pay for part of the downpayment and closing costs.

Basic Loan FeaturesSecondary financing

Buyer may take out a second mortgage loan to pay for part of the downpayment and closing costs.

The source of secondary financing can be:an institutional lenderthe property sellera private investor

Basic Loan FeaturesInterest rates

The interest rate for a loan can be either fixed or adjustable.


The interest rate for a loan can be either fixed or adjustable.Fixed-rate: the interest rate remains the

same throughout the loan term.


The interest rate for a loan can be either fixed or adjustable.Fixed-rate: the interest rate remains the

same throughout the loan term.Adjustable-rate: the interest rate is

adjusted periodically throughout the loan term to reflect current market interest rates.

With ARMs, the borrower rather than the lender bears the risk of market rate fluctuations.

Interest RatesAdjustable-rate Mortgages (ARMs)

With ARMs, the borrower rather than the lender bears the risk of market rate fluctuations.Because of this risk, ARMs have lower

initial interest rates than fixed-rate loans.

Interest RatesAdjustable-rate Mortgages (ARMs)

ARMsElements

Elements of an ARM include the:indexmarginadjustment periodscapspossibility of negative amortization

Elements of an ARMIndex

Index: A published statistical report that indicates changes in the cost of money.


Index: A published statistical report that indicates changes in the cost of money.An ARM’s interest rate is initially set

according to market rates at the time the loan begins.


Index: A published statistical report that indicates changes in the cost of money.An ARM’s interest rate is initially set

according to market rates at the time the loan begins.

The rate is then adjusted periodically according to the selected index.

Elements of an ARM Margin

Margin: The difference between the index rate and the interest rate charged to the borrower.


Margin: The difference between the index rate and the interest rate charged to the borrower.The lender adds a margin (i.e., 2

percentage points) to the index rate to cover the lender’s expenses and profit.


Margin: The difference between the index rate and the interest rate charged to the borrower.The lender adds a margin (i.e., 2

percentage points) to the index rate to cover the lender’s expenses and profit.

The margin stays the same throughout the loan term.

Elements of an ARM Adjustment periods

ARMs have two adjustment periods.

Rate adjustment period: This determines how often the interest rate of an ARM can change.

Elements of an ARM Adjustment periods

ARMs have two adjustment periods.

Rate adjustment period: This determines how often the interest rate of an ARM can change.

Payment adjustment period: This determines how often the monthly payment may change.

Elements of an ARM Caps

Lenders use caps to avoid large payment increases that might force a borrower into default.


Lenders use caps to avoid large payment increases that might force a borrower into default.Interest rate cap: Limits the amount the

interest rate may go up over a year, or over the loan term.


Lenders use caps to avoid large payment increases that might force a borrower into default.Interest rate cap: Limits the amount the

interest rate may go up over a year, or over the loan term.

Payment cap: Limits the amount the lender can raise the monthly payment amount.

Elements of an ARM Negative amortization

Some ARMs (not many) permit negative amortization:causes a loan’s principal balance to go up

rather than down, as unpaid interest is added to the balance

Elements of an ARM Negative amortization

Some ARMs (not many) permit negative amortization:causes a loan’s principal balance to go up

rather than down, as unpaid interest is added to the balance

occurs if increases in the monthly payment amount don’t keep up with increases in the loan’s interest rate

SummaryBasic Loan Features

Loan term Amortization Loan-to-value ratio Secondary financing Fixed-rate mortgage Adjustable-rate

mortgage

Index Margin Rate and payment

adjustment periods Rate and payment

caps Negative

amortization

Applying for a Residential LoanBasic loan features


Residential Financing Programs

The major types of residential financing include:conventional loansFHA-insured loansVA-guaranteed loansCal-Vet loans

Residential Financing Programs Conventional loans

Conventional loan: Any institutional mortgage not backed by a government program.


Conventional loan: Any institutional mortgage not backed by a government program.

Lenders can make conventional loans according to their own rules, but most follow Fannie Mae and Freddie Mac standards so the loans can be sold on the secondary market.


Nonconforming loan: A loan that doesn’t meet Fannie Mae or Freddie Mac standards.


Nonconforming loan: A loan that doesn’t meet Fannie Mae or Freddie Mac standards.

A lender can make a nonconforming loan, but will have to keep it in its own portfolio.

Conventional LoansLoan-to-value ratios

Conventional loans are divided into 80%, 90%, and 95% loans.



If a loan falls between these percentages, round up to determine which kind it is.



If a loan falls between these percentages, round up to determine which kind it is.A loan with an 81% LTV, for instance, is

a 90% loan.


The standard LTV is 80% for conventional loans.


The standard LTV is 80% for conventional loans.Loans with 90% or 95% LTVs represent

added risk for the lender, and will require the borrower to pay private mortgage insurance.

Private mortgage insurance covers only a portion of the loan, typically 20% to 25% of the loan amount.

Conventional LoansPrivate mortgage insurance


If a borrower defaults on a loan with PMI, the lender can:sell the property, or



If a borrower defaults on a loan with PMI, the lender can:sell the property, or relinquish the property to the insurer and file

a claim for any losses suffered, up to the policy amount


Conventional LoansOwner-occupancy

A conventional lender usually requires the borrower to live in the house rather than renting it to others.

Conventional LoansOwner-occupancy

A conventional lender usually requires the borrower to live in the house rather than renting it to others.Exception: when the downpayment is 25%

or more.

Conventional LoansQualifying standards

Fannie Mae and Freddie Mac set underwriting standards for conventional loans.



Their standards include both a maximum housing expense to income ratio and a maximum total debt service ratio.



Their standards include both a maximum housing expense to income ratio and a maximum total debt service ratio.The applicant must meet standards under

both these tests.

Conventional LoansAssumption

Most conventional loans contain an alienation clause.

Conventional LoansAssumption

Most conventional loans contain an alienation clause.This prevents the borrower from selling the

loan and having the buyer assume the loan without lender’s permission.

SummaryConventional Loans

Conventional loan Nonconforming loan Conventional LTVs Owner-occupancy Private mortgage insurance Qualifying standards

Residential Financing Programs FHA-insured loans

The Federal Housing Administration (FHA) was created in 1934 to promote home sales and financing for low- and middle-income homebuyers.

Residential Financing Programs FHA-insured loans

The Federal Housing Administration (FHA) was created in 1934 to promote home sales and financing for low- and middle-income homebuyers. The FHA’s main activity is insuring

mortgage loans through the Mutual Mortgage Insurance Plan.

Residential Financing Programs FHA-insured Loans

The FHA does not accept loan applications directly from borrowers.

Residential Financing Programs FHA-insured Loans

The FHA does not accept loan applications directly from borrowers.Borrowers should apply to a lender that

has been approved to make FHA-insured loans.

FHA-insured LoansKey characteristics

Key characteristics of FHA loans:Typically 30-year loans, although they may

be shorter.



be shorter.Property must be owner-occupied, with 1-

4 units.Lender will charge a 1% origination fee.



be shorter.Property must be owner-occupied, with 1-

4 units.Lender will charge a 1% origination fee. Qualifying standards are less stringent

than conventional loans.FHA loan may have a lower interest rate

than a conventional loan.


FHA loans require a low downpayment, often less than 3% of the loan amount.

Mortgage insurance is required for every FHA loan for the duration of the loan term.


FHA loans require a low downpayment, often less than 3% of the loan amount.

Mortgage insurance is required for every FHA loan for the duration of the loan term.

Maximum FHA loan amount varies from area to area.

Loan limits in areas with expensive housing are higher than those in areas of inexpensive housing.

FHA-insured LoansQualifying standards

The maximum income ratios are higher for FHA borrowers than conventional borrowers.


The maximum income ratios are higher for FHA borrowers than conventional borrowers.

An FHA borrower’s mortgage payments can be a higher percentage of his income than a conventional borrower.

The FHA program doesn’t have maximum income limits.


The FHA program doesn’t have maximum income limits.

A buyer at any income level could qualify for an FHA loan so long as the loan amount didn’t exceed the maximum allowed for the area.


FHA loans require both:a one-time mortgage insurance premium

(paid at closing), and


FHA loans require both:a one-time mortgage insurance premium

(paid at closing), andannual mortgage insurance premiums

(usually paid each month).


FHA-insured LoansAssumption

FHA loans that closed before 1990 may be freely assumed.



Newer loans may be assumed only if the buyer:meets FHA underwriting standards



Newer loans may be assumed only if the buyer:meets FHA underwriting standardsintends to occupy the home as a primary

residence

SummaryFHA-insured Loans

Federal Housing Administration Owner-occupancy Maximum loan amount Minimum cash investment FHA qualifying standards

Residential Financing Programs VA-guaranteed loans

VA loans: Loans guaranteed by the government, meaning that if the borrower defaults, the Department of Veterans Affairs will reimburse the lender for all or part of its loss.

To be eligible for a VA loan, a borrower must have served a period of active duty in the U.S. armed forces.

VA-Guaranteed Loans Eligibility

To be eligible for a VA loan, a borrower must have served a period of active duty in the U.S. armed forces.Spouses of deceased or missing veterans,

and long-term national guard or reserves members, are also eligible.

VA-Guaranteed Loans Eligibility

VA-guaranteed LoansLoan process

An eligible veteran will be issued a Certificate of Eligibility by the VA.



The veteran will apply to a lender, not the VA.



The veteran will apply to a lender, not the VA.

The property must be appraised according to VA guidelines. The appraised value will be set forth on a Certificate of Reasonable Value.

VA-guaranteed LoansCharacteristics

Key characteristics of VA loans:VA loans don’t require a downpayment or

have a maximum loan amount.



have a maximum loan amount.VA qualifying standards are even less

strict than FHA standards.



have a maximum loan amount.VA qualifying standards are even less

strict than FHA standards.VA loans do not require mortgage

insurance.

VA-guaranteed Loans Characteristics

A VA loan applicant must intend to occupy the property being purchased.



VA loans are usually fixed-rate 30-year loans.



VA loans are usually fixed-rate 30-year loans. VA borrowers may opt to pay discount points

on a loan.

VA-guaranteed LoansVA guaranty

Although there is no maximum VA loan amount, the VA sets a maximum guaranty amount.

VA-guaranteed LoansVA guaranty

Although there is no maximum VA loan amount, the VA sets a maximum guaranty amount.

For a large loan, the lender may require a downpayment if the purchase price exceeds the maximum guaranty amount.

VA-guaranteed LoansRestoration of entitlement

If a veteran pays off a VA loan:his or her full guarantee entitlement is

restored


If a veteran pays off a VA loan:his or her full guarantee entitlement is

restoredhe or she can obtain another VA loan with

the maximum guaranty


If a VA loan is assumed, in order for the seller’s entitlement to be restored, the buyer must be an eligible veteran willing to substitute his entitlement.

VA-guaranteed LoansQualifying standards

A VA loan underwriter will apply only one ratio, a total debt to income ratio.



The underwriter must also consider minimum residual income requirements.



The underwriter must also consider minimum residual income requirements.The borrower must have a certain amount

of income left after meeting all monthly debt obligations.

Residential Financing Programs Cal-Vet Loans

Veterans in California may also obtain a home loan through the California Veterans Farm and Home Purchase Program. These are called Cal-Vet loans.


The state Department of Veterans Affairs processes, originates, and services the loans.


The state Department of Veterans Affairs processes, originates, and services the loans.

The state purchases and takes title to the property, and then sells it to the veteran through a land contract.


Key characteristics of Cal-Vet loans.To be eligible, a veteran must have

served on active duty during a wartime period.




Maximum loan amounts vary from county to county.




Maximum loan amounts vary from county to county.

A small downpayment is required, but LTVs of 95% to 97% are common.


A Cal-Vet borrower pays a funding fee and application fee, but cannot pay discount points.



The home or farm must be owner-occupied.



The home or farm must be owner-occupied. New Cal-Vet borrowers must purchase life

insurance through the Cal-Vet program.

SummaryVA-guaranteed and Cal-Vet Loans

VA-guaranteed loan VA eligibility Certificate of Reasonable Value VA guaranty Restoration of entitlement VA qualifying standards Cal-Vet loan Cal-Vet eligibility

Principles of California Real Estate

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