How to Apply for a VA Loan?
If you are an active duty member, veteran, member of the National Guard, or the surviving spouse of a member, you may be eligible for a VA home loan.
These government loans are insured by the US Department of Veterans Affairs. They have no down payment, no private mortgage insurance and low interest rates.
For those who are eligible, the benefits of the VA home loan are hard to beat.
And, it’s easy to apply for VA funding. Although these loans are guaranteed by the government, most of the major lenders offer them. So you can easily check your eligibility and pricing online.
Start your VA loan application (November 22, 2021)
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Steps to Apply for a VA Home Loan
Here’s what to expect when applying for this government guaranteed home loan.
1. Find a VA Approved Mortgage Lender
You can only get a VA mortgage from lenders approved by the Department of Veterans Affairs to issue these loans.
The good news is that a large number of mortgage lenders are VA approved. Many banks, credit unions, mortgage companies, and online lenders offer VA loans.
Confirm that a lender offers this type of financing before submitting an application. You can usually find information on whether a lender offers this program on their website.
2. Apply for your Certificate of Eligibility (COE)
Your Certificate of Eligibility (COE) verifies your eligibility for the VA loan program based on your military service history. You need this document to get approval for a VA loan.
Fortunately, applying for your COE is simple: you can do it online using the VA eBenefits Portal, or you can just ask the lender to withdraw your COE when you apply for a VA loan. They can usually do this in just a few minutes.
Note that if you are applying for a VA Interest Rate Reduction Refinance Loan (IRRRL), you do not need to apply for a COE because your eligibility was verified during your first VA loan.
Check your VA loan eligibility (November 22, 2021)
3. Apply online, in person or by phone
Once you’ve found a VA approved mortgage lender and obtained your COE, you can complete an application for get pre-approved for a loan.
During the application process, a lender checks your income, credit, and employment to make sure you meet VA financing requirements. If you qualify, they will send you a pre-approval letter giving you financial support to make an offer when you find the home you are looking for.
4. Buy a house
Then you will work with a real estate agent to locate a property and submit an offer.
If the seller accepts your offer, you will present the purchase contract to your mortgage lender. Your lender will then issue a Loan estimate which contains information regarding mortgage terms, monthly payments, interest rates, closing costs and other mortgage costs.
5. Compare rates and choose a lender
Keep in mind that you can (and should) apply to several VA lenders. You can use the loan estimates you receive from each to compare loan terms, mortgage rates, and fees.
Once you find the best deal, you can go ahead with that lender and complete the entire underwriting and approval process.
Start your VA loan application (November 22, 2021)
Documents to apply for a VA loan
Getting approved for a VA home loan involves documenting your income, credit, debt, and assets. Lenders use these documents to assess your financial situation and make sure you can pay the mortgage payments on your new home.
Typical documents required for a mortgage application include:
- Tax and W-2 declarations for the two previous years (no W-2 is necessary if self employed)
- Bank account statements and investment statements
- Recent payslips
- Rental history
- Employment verification letter
- Copy of your driving license
VA loans also require other documents. For example, you will need a Certificate of eligibility (COE) confirming that you qualify for a VA loan.
Your Certificate of Eligibility also provides information about your entitlement to VA, which determines how much you are eligible to borrow.
What happens after my application?
You can start applying for a VA loan in just a few minutes. But the entire loan process usually takes around 30-45 days on average.
After the initial application, your mortgage continues until subscription process. This is when your lender takes a closer look at your credit report and supporting documents. He also appraises the property to make sure your new home is a safe investment.
The subscription process
As a home buyer, you can apply for a home inspection right now. An inspection is not required, but uncovering costly hidden issues is highly recommended.
In your purchase contract, you can include a clause that states “The sale is subject to a satisfactory home inspection”. If the home inspection report reveals any issues, you can ask the seller to resolve those issues before proceeding with the mortgage.
A home assessment is required by mortgage lenders. This involves a third party appraiser visiting the property and assessing its value. Generally, you can’t borrow more than the value of a property.
If the home estimate is less than the purchase price, you will have to pay the difference out of pocket or renegotiate the sale price with the seller.
The subscription process also involves a title search to research potential title issues.
Finally, the underwriter will review your income, assets and debts before issuing a final approval and setting a closing date.
Keep in mind that the underwriter may have questions or request additional information during this process. Responding to these requests in a timely manner helps maintain the closure on time.
Final approval and closure
Once you receive final approval, your loan officer will set a closing date. Here you will sign the mortgage documents and pay your closing costs and down payment (minus everything serious money you paid when you made an offer).
Here is an example of your closing costs:
- Lender origination fees
- Discount points (optional to lower your rate)
- Expertise fees
- Prepaid property taxes and home insurance
- Registration fees
- Securities search fees
- Lawyer fees
- VA financing costs (optional to be paid in advance)
The VA financing fees is a one-time payment required on all VA loans by the Department of Veterans Affairs. It helps offset the cost of the VA mortgage program. You can pay these fees at closing if you want, but most borrowers build them into the loan amount to reduce their upfront costs.
Where can I apply for a VA home loan?
If you are considering getting a VA home loan, understand that you do not get one directly from the Department of Veterans Affairs.
Although this is a government guaranteed loan, you will need to contact a private lender for financing.
A good place to start is your personal bank or your credit union. But don’t stop here. You should also contact at least three other VA approved lenders to compare rates and terms.
Getting a low interest rate can save thousands of dollars over the life of the loan, and lower fees help lower your out-of-pocket expenses at closing.
Check Your VA Loan Options (November 22, 2021)
Am I eligible for the VA home loan program?
Obtaining approval for a VA home loan requires meeting the eligibility requirements of the program.
The VA does not set a minimum credit score, but many lenders will require a minimum credit score of 620. Additionally, your income must be high enough to qualify for the desired loan amount, and VA home loans generally require a debt to income ratio not more than 41%.
You must also meet the “occupation” requirements of the VA. The house must be a primary residence that you will be living in full time (meaning you cannot finance an investment property or vacation home using a VA loan).
As long as service requirements for a VA loan, you are likely to be eligible if any of the following apply:
- You have served at least 90 consecutive days of active service in wartime
- You have completed 181 days of active peacetime service
- You have served at least six years in the National Guard or in the reserve
- You are the surviving spouse of a member who died in the line of duty or died of a service-related disability
The benefits of the VA loan are almost unbeatable for first-time home buyers and current homeowners.
With low rates, no PMI, no loan limit, and no down payment required, this program is one of the best for buying or refinancing a home.
So, if you meet the service requirements listed above, the first thing you should do is verify your VA mortgage eligibility.
Show me today’s rates (November 22, 2021)