CalVet Loan Facts

Am I eligible for a CalVet Home Loan?

The simple answer is that if you received a discharge classified as Honorable or Under Honorable Conditions, and you served a minimum of 90 days active duty (not including active duty for training purposes only), you are eligible for a CalVet Home Loan. Recent changes in the Military & Veterans Code and CalVet Home Loan funding policies have made most veterans eligible under state law, including those whose entire active service was during peacetime.

There are exceptions to the 90 days service requirement for veterans who

  • were discharged sooner due to a service-connected disability, or
  • are eligible to receive a U.S. campaign or expeditionary medal, or
  • were called to active duty from the Reserves or National Guard due to a Presidential Executive Order.

Current members of the California National Guard or the US Military Reserves who have served a minimum of one year of a six year obligation are also eligible provided they qualify as first time home buyers or purchase properties located in certain Targeted Areas.

I need a copy of my DD214 to apply for a loan. How do I get one?

Obtaining a copy of your Release from Active Duty (DD214) is easier than ever. Once you have searched your personal records and determined that you no longer have a copy there are several things you can do. In the past veterans were advised to have their DD214 recorded in the county they went home to after their release. If you did that, contact the county recorder and you should be able to get a copy there. If you used a DD214 to apply for other benefits, such as educational or medical benefits, the agency you applied to may be able to give you a copy. If neither of these ideas work the fastest way to obtain a copy is through the National Archives on their website at http://www.archives.gov/veterans/military-service-records/get-service-records.html. They are the records custodian for most discharged and retired members of all branches of service. Expect a two to three week wait to receive your record, but ordering online may speed up the process. Financial Independence Mortgage can begin processing your loan without the DD214. Contact our office at (661) 726-9000 for assistance.

I am career military and currently on active duty. Can I apply for a loan now?

Yes. CalVet Home Loans are available to active duty personnel. However, there is an occupancy requirement for the life of the loan. You or members of your immediate family must occupy the home within 60 days of close of escrow and continue to occupy until the loan is paid in full. If you are uncertain about how long you will be able to occupy the home before you have a change of station, you should consider whether or not buying a home is the right decision. If you have to sell the home in the first few years the costs of sale may be more than your equity in the property including your down payment and any appreciation in value that occurs. On the other hand, if your family will remain in the home even if you are reassigned, and your intent is to live in the home after retirement, it may be a good idea to buy now.

I am currently on active duty and due to be released soon. Can I apply for a loan now?

Yes, if you or members of your immediate family will be able to occupy the home within 60 days of the close of escrow. Immediate family includes your spouse and/or dependent children. You must also have sufficient income to qualify for the loan. If you are returning to a job you held prior to your enlistment or orders to active duty, and your employer can confirm your employment and projected income, we will be able to use that income to qualify you. If you are starting a new job, the employer must confirm the start date and projected income. We can also use retirement income and your spouse’s income to qualify you for the loan. Contact one of our offices to discuss your situation and to pre-qualify.

Can I refinance the home I currently own?

No. You must apply for your CalVet Home Loan prior to taking title to the property. If you are constructing a home on property that you already own, you must apply before the home is complete and a certificate of occupancy is issued.

What is the interest rate on CalVet Home Loans?

Current interest rates are published on this website at http://www.cdva.ca.gov/calvetloans/interest.pdf. Please remember that our interest rates are subject to change without notice. Your rate will be locked in as of the date you submit a loan application on a specific property.

Is there a penalty if I decide to refinance my CalVet loan with another lender later on?

CalVet Home Loans do not have a prepayment penalty. You can pay off your loan at any time. The escrow holder handling your new loan can request a payoff from us. Since your fire and hazard insurance and disaster insurance are tied to your loan make sure you have arranged for replacement coverage before you pay us off.

Is the CalVet interest rate variable or fixed?

CalVet Loans have always had a variable interest rate, although historically rates have not been changed often, and the rate is not tied to an index. All loans issued prior to 1999 are required by law to have a uniform interest rate, and if changed they must all change together. Loans issued in 1999 and subsequent years have rates that were set based on the cost of the bond funds and market conditions, and have a cap on the rate increase of 0.5% (1/2 of 1%) over the life of the loan. It is unlikely that the department will need to change the rates on existing loans.

What is the loan term for CalVet Home Loans?

Since the bonds that we sell to fund the program are 30-year bonds we set up all new loans for 30-year terms. However, you can make additional payments on the loan principal at any time, and the effect of making additional principal payments is to reduce the loan term. If you want to pay off your loan in 15 or 20 years we can calculate what the principal and interest payment would need to be and you can make that extra payment amount each month. There is no prepayment penalty for paying the loan off early.

Can I borrow the down payment for my loan?

Yes. You can borrow the down payment provided that your income is sufficient to handle the monthly obligation for that loan in addition to the CalVet loan and your other monthly obligations. If the loan is to be secured by a deed of trust on the property, you must submit copies of the Note and Deed of Trust during loan processing, and we will require that the lender sign a subordination agreement acknowledging that their loan will be in second position to the CalVet loan. If the total down payment, including your cash down payment and the secondary financing, total 20% or more of the purchase price (or market value if less), then the funding fee, which is used to purchase mortgage insurance, is waived. You must disclose the source of the down payment on your loan application, and if the application does not show sufficient cash assets to pay the difference between the sales price and loan amount, we will ask you for that information.

Does my CalVet Loan affect my VA or CalVet entitlement?

Possibly. CalVet obtains a loan guarantee from the USDVA on some loans, and when VA guarantees the loan you are using both your CalVet and VA entitlements. If the VA guaranty is not obtained then only your CalVet entitlement is affected. Both CalVet and VA entitlement is restored when the loan is paid off.

How are CalVet Home Loans processed?

The processing for a CalVet Home Loan is very similar to the process for other lenders and types of loans. Of course we need documentation to confirm that you are a veteran. Then we use the same application form and other forms that all lenders use. You can also apply on line. Your application initially will be screened by staff in one of our field offices. Some loans will be fully processed there, but most loans are forwarded to our centralized loan-processing unit in Sacramento. Staff in the field offices can assist you in tracking the loan, and we can provide automatic email notification so that you are aware of every status change that occurs during processing. An appraisal is ordered from an appraiser in your area, and when processing is complete you will receive a loan approval letter and loan documents will be sent to your escrow holder by overnight mail. You sign the loan documents at the escrow and they return them to us and request the loan funds when they are ready to close the escrow. Most loans are processed in under 30 days, but tell us if you need to close sooner. Our loan-processing goal is to meet your needs.

How are CalVet Home Loans different from other home financing?

There are some basic differences between CalVet Home Loans and other financing you might choose.

  • The State of California has chosen to provide CalVet Home Loans as a benefit to veterans who want to live in our state. Because it is a veteran’s benefit we make every effort to make the loan available to all veterans. We qualify you for the loan using the same criteria as other lenders, but because we are a direct lender and we service the loans we make, we are able to give every veteran extra consideration, and if we can qualify you for a loan you get the same rate as everyone else. We will not classify you as a higher risk and increase the interest rate.
  • CalVet uses a Contract of Sale as the financing instrument for our loans. What that means is that CalVet purchases the home you selected and takes legal title to the property at close of escrow, and then sells the property to you using a contract of sale. When the loan is paid in full, either when the last payment is made or if you refinance or sell, we issue a grant deed to transfer legal title to you. A document called a Memorandum Agreement of Sale is recorded to show that the contract exists, and you hold what is referred to as the equitable title to the property which gives you all the rights of ownership. One of the major advantages of a Contract of Sale is that CalVet is able to obtain Fire and Hazard insurance, and Disaster Insurance and provide superior insurance coverage at group rates. The technicality of holding legal title also assists us in obtaining the best possible bond ratings for the bonds that we sell to finance the program. For the very small number of veterans who default on their CalVet Home Loan, the Contract of Sale makes it easier for us to recover the property and minimize losses to the program.
How do I know when to make payments and how much to pay?

You will receive monthly billing statements showing the amount due for principal, interest and loan impounds (escrows). A payment coupon is included with the statement to be returned with your payment. All payments are due on the first of each month. You can also set your account up for automated electronic funds transfer. Your payment would be withdrawn from your checking account on the 5th of each month. You will still receive a monthly statement, but you would not have to write a check or worry about whether or not we receive it by the 16th of the month to avoid late fees.