How Can I Obtain a VA Loan?
You may be qualified for a VA home loan if you are: an active-duty service member, a member of the National Guard, a veteran, a the surviving spouse of a service member.
These government loans are guaranteed by the Department of Veterans Affairs of the United States. No down payment is required, and there is no private mortgage insurance. Interest rates are very inexpensive.
For those who qualify, VA home loan perks cannot be beaten.
Additionally, applying for VA funding is simple. Even though the government guarantees these loans, most significant lenders provide them so that you can easily verify your eligibility and pricing online.
Application Procedures for a VA Home Loan
Expect the following when applying for this government-backed mortgage.
Find a VA-Approved Mortgage Lender
VA mortgages are only available via lenders authorized by the Department of Veterans Affairs to provide these loans.
A large number of mortgage lenders are VA-approved, which is excellent news. Several banks, credit unions, mortgage firms, and online lenders offer VA loans.
Before completing an application, verify that a lender accepts this form of financing. On a lender’s website, you can often discover information regarding whether or not they provide this service.
Apply for Your Certificate of Eligibility (COE)
Based on your military service record, your Certificate of Eligibility (COE) certifies your eligibility for the VA loan program. This document is required for VA loan approval.
You may request your COE online through the VA’s eBenefits site, or you can have your lender retrieve your COE when you apply for a VA loan. Typically, they can accomplish this in a few minutes.
Note that if you are applying for a VA Interest Rate Reduction Refinance Loan (IRRRL), you are not required to submit a COE because your eligibility was already confirmed for your first VA loan
Apply Online, in Person, or by Phone
After locating a VA-approved mortgage lender and obtaining a Certificate of Eligibility, you can submit an application to be pre-approved for a loan.
A lender examines your income, credit, and job status during the application process to verify you satisfy the requirements for VA financing. If you qualify, they will issue a pre-approval letter that provides you with the financial support to make an offer on the home of your choice.
Search for a House
You will next collaborate with a real estate agent to identify and place an offer on a property.
If the seller accepts your offer, you will present the purchase contract to your mortgage lender. Then, your lender will provide you with a Loan Estimate that details the mortgage terms, monthly payments, interest rates, closing expenses, and other mortgage fees.
Compare Interest Rates and Select a Lender
Remember that you may apply with various VA lenders, and you should. The Loan Estimates provided by each lender may be used to compare loan conditions, mortgage rates, and costs.
Once you’ve identified the best bargain, you may proceed with that lender and finish the underwriting and approval procedure.
Application Materials for a VA Loan
To get qualified for a VA home loan, you must provide documentation of your income, credit, obligations, and assets. Lenders use these documents to establish if you can afford the monthly payments on your new home based on your financial position.
Typical requirements for a mortgage loan application include the following:
- Tax returns and W-2 forms from the two prior years (no W-2s needed if self-employed)
- Statements of bank accounts and investments
- Recent wage slips
- Rental record
- Employment verification letter
- Your driver’s license photocopy
VA loans demand more paperwork. For instance, you’ll need a Certificate of Eligibility (COE) proving you match the VA loan standards.
Your Certificate of Eligibility also contains information on your VA entitlement, affecting the maximum loan amount you can borrow.
What Happens Once I’ve Applied?
A VA loan application may be initiated in a matter of minutes. However, the loan process typically takes between 30 and 45 days.
Following the first mortgage application, the underwriting procedure ensues. This is when your lender examines your credit record and accompanying paperwork in further detail. It also assesses the property to verify that your new residence is a sound investment.
The Underwriting Procedure
You, as the homebuyer, can now request a house inspection. An examination isn’t needed, but it’s strongly advised to find expensive hidden issues.
You might insert language in your purchase agreement stating that the sale depends on a good house inspection. If the house inspection report shows problems, you can request that the seller address these concerns before closing the mortgage.
Mortgage lenders must get a house appraisal. An independent appraiser visits the property and determines its worth. As a general rule, you cannot borrow more than the value of a property.
If the appraised value of the house is lower than the purchase price, you must pay the difference or renegotiate with the seller.
The process of underwriting also includes a title search to identify any title concerns.
The underwriter will next evaluate your income, assets, and liabilities before providing a final approval and setting a closing date.
During this procedure, the underwriter may ask questions or seek further information. Responding to these queries promptly helps maintain the closure schedule.
Approval and Closing
Your loan officer will set a closing date after you obtain final approval. Here, you will sign the mortgage documents and pay closing fees and down payment (minus any earnest money you paid when you made an offer).
These are examples of your closing costs:
- Loan origination cost
- Discount factors (optional to lower your rate)
- Appraisal fees
- Property tax and homeowner insurance premiums are paid in advance.
- Recording costs
- Fees for title searches
- Lawyer’s fees
- VA funding fee (optional to pay upfront)
The VA financing fee is a one-time payment required by the Department of Veterans Affairs for all VA loans. It helps mitigate costs associated with the VA mortgage program. If desired, you can pay this charge at closing, but most borrowers include it in the loan amount to lower out-of-pocket expenses.
Where Can I Apply for a VA Home Loan?
If you’re considering a VA home loan, you should know that you cannot obtain one directly through the Department of Veterans Affairs.
Although this is a government-backed loan, you must get money from a private lender.
The best place to begin is with your particular bank or credit union. However, continue. You should also call at least three VA-approved lenders to evaluate prices and conditions.
A low-interest rate can save you hundreds of dollars over the life of the loan, and lesser fees can minimize your closing expenses.
Do I Qualify for a VA-Backed Mortgage?
To qualify for a VA home loan, applicants must fulfill the program’s eligibility conditions.
The VA does not establish a minimum credit score; however, many lenders need a score of at least 620. Additionally, your salary must be sufficient to qualify for the desired loan amount, and VA home loans typically require a maximum debt-to-income ratio of 41%.
In addition, you must satisfy the VA’s “occupancy” standards. The home must be your principal residence, meaning you cannot use a VA loan to purchase an investment property or vacation home.
You are likely to meet the service criteria for a VA loan if one of the following applies:
- You have spent at least 90 consecutive days in wartime active duty.
- You have served 181 days of peacetime active duty.
- You have at least six years of National Guard or reserve service.
- You are the surviving spouse of a service member who died in the line of duty or of a service-connected disability.
VA loan perks for first-time homebuyers and current homeowners are practically unrivaled.
With low rates, no PMI, no loan limitations, and no needed down payment, this program is among the finest for home purchase and refinancing.
The first step is determining your VA mortgage eligibility if you fulfill the aforementioned service criteria.