Getting a VA loan can seem daunting, but the process doesn’t have to be. Luckily, a VA loan is well worth the minimal effort required. This guide provides a quick overview of the steps needed to apply for a VA mortgage.
Why You Should Apply for a VA Loan
If you’re a veteran or active-duty military member researching the types of mortgages available to you, you should definitely consider VA home loan financing.
VA loans offer veterans unmatched benefits, affordability and ease. These loans have been offered to America’s veterans for over half a century and differ from conventional home loans.
Private VA-approved lenders source the loans. However, a portion of a VA loan is backed by the guarantee of the Department of Veterans Affairs (VA). If you default on your house payments, the VA promises to repay some the loan back to the lender, depending in part on the VA loan limits. This gives lenders the security to offer privileges exclusive to VA loans.
VA loans stand out from the rest because they tend to feature low interest rates. VA loan rates are typically among the lowest on the market. Additionally, VA loans come with no monthly private mortgage insurance payments, saving you thousands of dollars over the life of the loan.
Last but certainly not least, VA loans require no down payment. It is one of the only financing options out there that offers comprehensive financing.
Now that you know the perks, let’s explore the application process.
How to Find a VA Loan Lender
VA loans are issued through VA-approved lenders, like banks or mortgage companies, but are guaranteed through the VA.
TheMilitaryWallet.com has a helpful resource that details the best VA loan companies. There, you can learn more about each lender, their strengths and unique offers. Additionally, we have written individual reviews about several lenders, including Veterans United Home Loans, Rocket Mortgage, USAA, loanDepot and Navy Federal Credit Union.
How to Prequalify for a VA Loan
Once you’ve chosen a lender, you should prequalify for a VA loan before shopping around for a home. Prequalification will allow you to make an upfront offer on a home you’re interested in.
There are a couple of ways to prequalify. You can visit a VA-approved lender in person or apply online.
During the prequalification process, lenders will look at information like your gross and residual income, the area where you currently live and how many people live in your household. This information will be factored into the lender’s assessment of whether you qualify for a VA loan.
However, don’t confuse prequalification and preapproval. Getting prequalified allows your lender to start the preapproval process, which tells you the amount of money available to you once you officially apply for a loan.
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Verify Your VA Loan Eligibility
To prequalify, you must successfully meet VA loan eligibility requirements. These include financial and service requirements.
Financial requirements include checks on your credit score, debt-to-income ratio, income and employment status. Your lender will require you to submit various documentation to better understand your ability to repay the loan.
Service requirements involve the VA Certificate of Eligibility (COE.) The COE is distributed by the VA and confirms that you meet their minimum service requirements. You don’t need a COE to start the VA loan process, but your lender will need to confirm your eligibility for the benefit before you can close on a VA loan.
You have likely met minimum service requirements if:
- You served 90 consecutive days of service during wartime
- You served 181 consecutive days during peacetime
- You completed six years of service in the Reserves or National Guard
- You are an active-duty military personnel
- You are the spouse of a veteran who died during their service or later because of it
Additionally, the veteran’s type of military discharge must not be under dishonorable conditions.
Asking your lender to help acquire your COE is often the easiest route. But you may also apply for your COE directly on the VA’s website or by mail through the Regional Loan Center for your state.
The Bottom Line
Now that you know more about applying for a VA loan, you’re one step closer to the home of your dreams. Once your application has been approved and you find that perfect home, you’ll be ready to schedule a VA appraisal.
Equal Housing Opportunity. The Department of Veterans Affairs affirmatively administers the VA Home Loan Program by assuring that all Veterans are given an equal opportunity to buy homes with VA assistance. Federal law requires all VA Home Loan Program participants – builders, brokers, and lenders offering housing for sale with VA financing – must comply with Fair Housing Laws and may not discriminate based on the race, color, religion, sex, handicap, familial status, or national origin of the Veteran.
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Fred C. Dunaway says
My wife and I lost our home in Biloxi, MS to Hurricane Katrina in August, 2005. In 2006 we bought a VA financed home in Gulf Breeze, FL. We recently sold our house in Florida and plan to rebuild on the lot we retained in Biloxi. Can you recommend a lending agency or a search source for the Biloxi, Gulfport, Mississippi area who finance new home construction?
Daniel says
When you understand a VA loan better, you’ll find that the entire process, from finding a lender all the way through to finalizing your loan isn’t as scary as you first thought.You should also note that you’ll most likely have to pay for the appraisal prior to finalizing your loan.