MRP Military Benefits & Housing Programs 2 — Questions and Answers
Question 1: Under BAH rate protection, what event would trigger a reduction in a service member's BAH amount?
- A national decrease in the annual BAH rate schedule
- A change in duty station, dependency status, or pay grade (Correct answer)
- Any TDY assignment exceeding 30 days
- An annual performance review resulting in no promotion
Correct answer: A change in duty station, dependency status, or pay grade
BAH rate protection prevents decreases due to national rate changes, but a PCS move, loss of a dependent, or change in pay grade can reset the rate.
Question 2: Which group is specifically exempt from paying the VA loan funding fee?
- All active duty service members on their first VA loan
- National Guard members with more than six years of service
- Veterans receiving VA compensation for a service-connected disability (Correct answer)
- Surviving spouses who remarried before age 57
Correct answer: Veterans receiving VA compensation for a service-connected disability
Veterans who receive VA disability compensation are exempt from the VA funding fee because the fee is waived for those with service-connected disabilities.
Question 3: What is the primary purpose of a VA Certificate of Eligibility (COE)?
- It certifies that the property meets VA minimum property standards
- It verifies the veteran's eligibility and available entitlement for a VA-backed loan (Correct answer)
- It confirms that the lender is VA-approved and authorized to originate VA loans
- It serves as the VA's official appraisal report for the subject property
Correct answer: It verifies the veteran's eligibility and available entitlement for a VA-backed loan
The COE is issued by the VA to document that the borrower meets service requirements and shows how much entitlement is available.
Question 4: In VA loan terminology, what does a veteran's 'entitlement' represent?
- The maximum purchase price the veteran may pay for a home
- The minimum credit score required to qualify for a VA loan
- The number of VA loans a veteran may hold at the same time
- The dollar amount the VA guarantees to reimburse the lender if the veteran defaults (Correct answer)
Correct answer: The dollar amount the VA guarantees to reimburse the lender if the veteran defaults
Entitlement is the VA's guaranty to the lender—it reduces the lender's risk and is what allows VA loans to be made without a down payment.
Question 5: How is a single service member's BAH rate determined when they live off-post?
- By a flat national rate applied uniformly to all E-5 and below
- By the rental housing costs in the zip code of their duty station (Correct answer)
- By averaging the BAH rates of their last three duty stations
- By the service member's personal preference for housing type
Correct answer: By the rental housing costs in the zip code of their duty station
BAH is based on local rental market data—specifically median costs for the housing type corresponding to the member's pay grade in their duty station zip code.
Question 6: What happens to a veteran's 'used' VA loan entitlement after the VA loan is paid in full and the property is sold?
- The entitlement is permanently lost and cannot be used again
- The entitlement is automatically restored with no action required
- The entitlement can be restored by submitting a request to the VA (Correct answer)
- Only 50% of the used entitlement can ever be recovered
Correct answer: The entitlement can be restored by submitting a request to the VA
After the loan is paid off and the property disposed of, the veteran must apply for entitlement restoration using VA Form 26-1880.
Question 7: Which statement most accurately describes the rules for assuming a VA loan originated after March 1, 1988?
- Such loans may be freely assumed by any buyer without approval
- Both the lender and VA must approve the assumption and the assumer must qualify (Correct answer)
- Assumptions are prohibited on all VA loans originated after that date
- Only other eligible veterans may assume the loan, with no approval required
Correct answer: Both the lender and VA must approve the assumption and the assumer must qualify
The 1988 rule ended 'free assumability'—post-1988 VA loans require lender and VA approval, and the assumer must meet creditworthiness standards.
MRP Military Benefits & Housing Programs 2
Under BAH rate protection, what event would trigger a reduction in a service member's BAH amount?