NC VA loan glossary
Mike Certo · Cornerstone First Mortgage · NMLS #260555 ·
VA loans + NC-specific Veteran programs have a vocabulary of their own. This glossary collects the terms Veterans actually encounter, plain-English definitions, and NC-relevant context where useful. Bookmark this page.
Program figures verified July 2026. Details change; confirm your scenario with us.
A
AMI (Area Median Income): Income benchmark used by North Carolina Down Payment Assistance (DPA) programs (NC Home Advantage, NC 1st Home Advantage) to determine eligibility. 2026 Cumberland AMI is ~$112,000 for a household of 4.
Assumable: A VA loan can be assumed by a qualified buyer (Veteran or non-Veteran). The original Veteran's entitlement stays tied to the loan unless the assuming party is also a Veteran substituting their own entitlement. Full guide.
ARM (Adjustable Rate Mortgage): VA permits ARMs but most VA loans are fixed-rate. Less common in NC market.
B
BAH (Basic Allowance for Housing): Monthly housing stipend paid to active-duty service members. Varies by base + rank + dependent status. 2026 Fort Bragg E-5 w/dep = $2,289. BAH calculator.
Back-end DTI: Total debt obligations (PITI + other monthly debts) as a percentage of gross income. VA guideline: 41%. Some lenders accept higher with strong residual income.
C
Cash-out refi: VA refinance that pulls equity out of the home. VA allows up to 100% LTV cash-out (higher than conventional 80% cap). Funding fee applies (2.15% first use / 3.30% subsequent).
Community special assessments: Some NC master-planned communities (Briar Chapel, Carolina Arbors, Wendell Falls) carry special assessments on top of HOA dues. They add to monthly housing cost, and the VA underwriter includes them in your DTI.
Closing costs: Fees paid at closing, typically 2-4% of loan amount. VA caps several. Seller can pay up to 4% in concessions.
Cluster home: Detached or semi-detached home in a planned community with shared common-area maintenance. Common in NC retirement communities. VA loan eligible if HOA approved.
COE (Certificate of Eligibility): VA-issued document confirming a Veteran's eligibility for the VA loan benefit. Free, obtained through VA.gov or via Mike. Required before VA loan can close.
Community property: NC is an equitable-distribution (common-law) state — a spouse does not take automatic 50% ownership, though lenders typically still require a non-borrowing spouse to sign certain closing documents.
Compensation: VA disability monthly payment based on rating (10%-100%). Federally tax-free in all states.
Conforming loan limit: Maximum loan size for standard VA (or conventional) financing. 2026 NC baseline: $832,750 statewide.
D
Defensible space: Cleared/maintained vegetation around a home in hurricane and flood-prone areas. Required by VA MPR + NC Department of Forestry in WUI zones.
DD-214: Discharge document issued at military separation. Used to verify VA loan eligibility + claim other Veteran benefits.
Disability rating (VA): Percentage rating (0% to 100%, in 10% increments) assigned by VA based on service-connected disabilities. 10%+ = waives VA funding fee. 100% P&T in NC = the first $45,000 of homestead value excluded under North Carolina disabled-Veteran property-tax exclusion.
DPA (Down Payment Assistance): NC programs that provide grants or forgivable seconds to help with down payment + closing costs. Top programs: NC Home Advantage and NC 1st Home Advantage. Stacker guide.
DTI (Debt-to-Income ratio): Total monthly debt divided by gross monthly income. VA guideline: 41% back-end. Front-end (PITI only) typically should be ≤29%.
E
Earnest money deposit (EMD): Money buyer puts up at offer acceptance to show good faith. Standard NC EMD is 1% of price; 2-3% strengthens VA offers in competitive markets.
Entitlement: Veteran's $0-down VA loan capacity. Currently $144,000 basic + 25% of FHFA conforming limit = roughly $208,000 total entitlement in 2026. Limits the $0-down amount; doesn't cap the loan size for Veterans with full entitlement.
Escrow account: Account where lender holds property tax + insurance funds and pays them when due. Most NC VA loans use escrow.
F
FAIR Plan (NC FAIR Plan): Insurance of last resort for homes that can't get standard market insurance — typically high-hurricane and flood-risk NC properties. More expensive, more limited coverage.
FHFA limit: Federal Housing Finance Agency conforming loan limit. 2026 baseline: $832,750 in every NC county.
First use: A Veteran's first time using VA loan benefit. Lower funding fee (2.15% at $0 down) vs subsequent use (3.30%).
Front-end DTI: PITI as a percentage of gross income. VA prefers ≤29% but DTI alone doesn't decide approval.
Funding fee: One-time VA fee paid at closing (can be financed). 2.15% first use, 3.30% subsequent at $0 down. Waived for 10%+ disability rating. Calculator.
G
Gross income: Income before taxes. Used for DTI calc.
Gross-up: Treatment of tax-free income (VA disability, BAH, etc.) as higher equivalent taxable income for mortgage qualification. Standard 25% boost. Calculator.
H
Homestead exclusion (disabled Veteran): G.S. 105-277.1C excludes the first $45,000 of a homestead's appraised value from property tax for Veterans rated 100% permanent-and-total (or receiving specially adapted housing benefits) and their unremarried surviving spouses. North Carolina has no partial-rating property-tax benefit. Full guide.
HOA (Homeowners Association): Community association charging monthly/annual fees for shared amenities + maintenance. Common in NC master-planned communities. Affects VA DTI calculation.
NC 1st Home Advantage: Statewide NCHFA DPA: $15,000 as a 0% deferred second forgiven over years 11-15; for first-time buyers and Veterans. Credit minimum 640.
NC Home Advantage Mortgage: NCHFA fixed-rate first mortgage with up to 3% forgivable down-payment assistance.
I
IRRRL (Interest Rate Reduction Refinance Loan): VA simplify refi. No income docs, no appraisal, no funding fee if disability waiver. Must pass VA's 36-month recoupment test. Calculator.
Inspection: Buyer-paid home inspection (separate from VA appraisal). Identifies condition issues + bargaining points.
J
Joint VA loan: Two Veterans buying together can use combined entitlement. Each contributes their entitlement; combined down-payment requirement scales accordingly.
Jumbo VA: VA loan above the FHFA conforming limit ($832,750 in NC). Veterans with full entitlement can finance to ~$4M with select lenders.
L
Land lease: Property where you own the home but lease the land. Rare in NC. VA typically can't finance.
LO (Loan Officer): Mortgage professional originating loans. Mike is an LO at Cornerstone First Mortgage. NMLS #260555.
LTV (Loan-to-Value ratio): Loan amount divided by appraised property value. VA allows 100% LTV (and effectively higher with funding fee financed).
Fort Bragg: U.S. Army post at Fayetteville, NC (formerly Fort Liberty). Home of the XVIII Airborne Corps and the 82nd Airborne Division — one of the largest military installations in the world. Base guide.
M
MCC (Mortgage Credit Certificate): Federal tax credit for portion of mortgage interest paid. NC Housing Authority administers. Can stack with VA + DPA.
MHA (Military Housing Area): Geographic area used to set BAH rates. Fort Bragg falls in the Fayetteville MHA; Camp Lejeune in the Jacksonville MHA.
MPR (Minimum Property Requirements): VA's property standards. Working A/C, sound roof, adequate water/sewer, no major safety issues, defensible space in hurricane and flood areas.
N
NADL (Native American Direct Loan): VA loan program for Native Veterans on tribal trust land. VA is the direct lender. Full guide.
Net income: Income after taxes. Used for VA residual income calc.
NMLS: Nationwide Multistate Licensing System for mortgage professionals. Mike: NMLS #260555. Cornerstone: NMLS #173855.
O
Occupancy: VA requires primary residence occupancy within 60 days of closing. No exception for second homes or investment property.
Origination fee: Lender fee for processing the loan. VA caps at 1% of loan amount.
P
NC Home Advantage Tax Credit (MCC): federal mortgage-interest tax credit up to $2,000/yr; cannot combine with NC 1st Home Advantage. (NCHFA
PCS (Permanent Change of Station): Military relocation between duty stations. 60-day window from arrival for VA primary-residence occupancy. Summer PCS tactics.
PITI: Principal, Interest, Taxes, Insurance. Total monthly housing payment. Calculator.
Pre-underwriting (TBD): Full underwriting before a specific property is identified. Strongest pre-approval format; Mike issues TBD letters for NC summer-PCS situations.
Primary residence: VA loan requirement. Must occupy as primary residence within 60 days of closing.
R
Reserves (military): National Guard + Reserve service. Reservists with 6+ years qualify for VA loan benefit.
Residual income: Net income remaining after PITI + utilities + debts. VA's hidden second qualifying test (separate from DTI). Required minimums by family size + region. Calculator.
Restored entitlement: VA entitlement restored after a previous VA loan is paid off (typically via home sale). Allows reuse for next purchase.
S
Seller concessions: Money seller agrees to pay toward buyer closing costs. VA allows up to 4%.
Subsequent use: Second or later use of VA benefit. Higher funding fee (3.30% at $0 down vs 2.15% first use).
Survivor benefits: Surviving spouse of KIA or service-connected disabled Veteran may be eligible for VA loan + property tax exemptions + Dependency and Indemnity Compensation.
T
TBD (To Be Determined): Pre-underwriting before property is identified. Strongest pre-approval letter format.
Term: Length of the loan. Standard VA is 30 years; 15-year and 20-year also available.
Tribal trust land: Land held in trust by the federal government for a tribe or individual Native American. Standard VA can't finance; NADL applies.
U
Underwriting: Lender's full review of borrower + property. Verifies income, credit, assets, property.
V
VA appraisal: VA-ordered appraisal verifying property value + MPR compliance. Different from buyer's inspection.
VA Builder ID: Registration number assigned by the VA Regional Loan Center (the Atlanta RLC for North Carolina) to qualified builders. Required for VA construction loans.
VA disability compensation: Monthly tax-free payment based on service-connected disability rating.
VA loan limit: Maximum loan size at full guaranty. 2026 NC baseline: $832,750.
Vested Veteran: Veteran who has earned the VA loan benefit through qualifying military service.
W
Hurricane and flood Factor: Property-specific hurricane and flood risk score (1-10). Higher scores affect insurance availability + costs. Hurricane and flood guide.
WUI (Wildland-Urban Interface): Areas where development meets wildland. Subject to defensible-space requirements; mostly NC mountain communities.
Z
Zero-down: Standard VA loan feature. No down payment required.
Term you encountered that's not here? Email Mike and he'll add it — this glossary grows as NC Veterans ask new questions.