Finance
Under what circumstance does a VA loan guarantee entitle a veteran to use their full entitlement for a no-down-payment loan above the standard limit?
AWhen the property is in a high-cost area
BWhen the veteran has full entitlement (no prior VA loan in use) and has no prior defaults✓ Correct
COnly on loans under $500,000
DOnly on new construction loans
Explanation
Veterans with full VA entitlement (their prior VA loan, if any, has been paid off or they've never used the benefit) can purchase a home with no down payment regardless of loan amount, subject to VA and lender underwriting requirements.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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