The document provides an overview of VA loans including: - VA loans are guaranteed by the VA to private lenders and can be used to purchase a primary home. Veterans must apply to a lender who will submit the application to the VA. - To qualify, veterans must have available entitlement shown on a Certificate of Eligibility. Maximum loan amounts are currently $417,000 including any required VA funding fee. - The VA funding fee varies from 0-3.3% depending on loan purpose, veteran status, and prior use of entitlement. The fee is paid to the VA upon closing.

19. VA ENTITLEMENT EXERCISES For 2008, every eligible veteran has 36,000 basic entitlement and $68,250 bonus entitlement. This brings the total entitlement up to $104,250 for 2008. The bonus entitlement kicks in automatically when the dollar amount of the loan for purchase of a home exceeds $144,000. Calculating Bonus Entitlement 2008 Conforming Loan Limit: $417,000 Less Maximum Loan w/ Full Basic Entitlement ($36,000 x 4): - $144,000 $273,000 x 25% 2008 Bonus Entitlement: $ 68,250 Exercise #1 Purchase with Full Entitlement Assumptions COE entitlement used -0- COE remaining entitlement $36,000 Lesser of sales price or value $231,500 Down payment funds $-0- $ available entitlement from COE + $ bonus entitlement = ___________ (total entitlement) $ X 4 = $_______________loan amount maximum for this veteran (total entitlement) (further limited by the sales price/value of the home)

20. VA LOAN AMOUNT EXERCISES Total Loan Amount Exercise #2 Assumptions: Regular Military 1 st time use Lesser of sales price or value $220,000 COE entitlement used -0- COE entitlement available $36,000 Down payment -0- $ available entitlement + $ bonus entitlement = $_______________ (total entitlement) $ X 4 = $ loan amount maximum (total entitlement) % funding fee X lesser of sales price or value = $ funding fee amount $ funding fee amount + $ lesser of sales price or value = $ total loan amount

21. VA LOAN AMOUNT EXERCISES Total Loan Amount Exercise #3 Assumptions: Regular Military (used eligibility to purchase a previous single family home which has been paid in full) Lesser of sales price or value $199,000 COE entitlement used -0- COE entitlement available $36,000 Down payment 5% $ available entitlement + $ bonus entitlement = $________________ (total entitlement) $ X 4 = $ loan amount maximum (total entitlement) $ lesser of sales price or value - $ down payment = $___________________(a) proposed loan amount (providing entitlement covers) % funding fee X proposed loan amount = $ funding fee amount $ funding fee amount + $ (a) proposed loan amount= $ total loan amount

24. FEES AND CHARGES (cont’d) Allowable Fee Description Prepaid Items The veteran can pay for the credit report obtained by the lender. For Automated Underwriting cases, the veteran may pay the AUS fee in lieu of the charge for a credit report. For “Refer” cases, the veteran may also pay the charge for a merged credit report, if required. Hazard Insurance The veteran can pay the required hazard insurance premium. This includes flood insurance, if required. Flood Zone Determination The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination. The veteran can pay a charge for a life-of-the-loan flood determination service purchased at the time of loan origination. A fee may not be charged for a flood zone determination made by the lender or a VA appraiser. Survey The veteran can pay a charge for a survey, if required by the lender or veteran. Many charge for a survey in connection with a condominium loan must have the prior approval of VA. Title Examination and Title Insurance The veteran can pay a fee for title examination and title insurance. Of the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran. Special Mailing Fees for Refinancing Loans For refinancing loans only, the veteran can pay charges for Federal Express, Express Mail, or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling. VA Funding Fee Unless exempt from the fee, each veteran must pay a funding fee to VA.