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How to get a VA mortgage
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Eligible veterans or active duty personnel who wish to purchase a home can use a VA loan for financing. These types of loans, guaranteed by the federal government and available from lenders nationwide, tend to offer attractive fixed-rate loans with little or no down payment. VA loans are also known for their more flexible credit requirements.
How to get a VA loan in 9 steps
Here is how a typical VA loan process works:
1. Find a VA-approved lender
Find a mortgage lender who participates in the VA loan program. An agent can help you find the necessary documents and loan amount for which you qualify. Don't be afraid to do research, because lenders may offer different deals based on interest rate, closing costs and discount points.
2. Obtain a certificate of eligibility
Before you can get pre-approved for a VA mortgage, you must obtain a Certificate of Eligibility (COE), which shows that you meet the initial eligibility criteria for the loan. To obtain a COE, visit the eBenefits portal on VA.gov or contact the VA for assistance. Borrowers can also apply through their lender.
Documents that may be required to obtain a COE include:
- Driver's license or other government-issued ID
- Recent financial information, including W-2s, pay stubs and bank statements.
- For active duty service members, a signed statement of service.
- For veterans, demobilization or separation papers (also known as DD214 form).
- For surviving spouses, a marriage certificate or license.
3. Obtain pre-approval for a VA mortgage
Being pre-approved for a mortgage shows sellers that you are serious about buying a home and that lenders consider you worthy of a loan. It is a statement or letter indicating the amount they will lend you in principle. It is not a mortgage guarantee, for which you need to submit a specific property for appraisal and possibly additional documentation, but it is an important first step.
4. Find a home
Contact a real estate agent familiar with VA mortgages, preferably one who specializes in assisting military personnel. Agents who specialize in veterans can help you understand what to look for to maximize your benefits.
5. Sign a purchase and sale agreement
Your agent's job is to help you develop a solid offer and a good negotiating strategy.
Once you have accepted the offer and worked out the details, you will sign a purchase and sale agreement with the seller. Don't forget the conditional clauses: they can cover the time available to find financing, the amount of deposit required and the right to have the house inspected. They can also include the seller's assumption of some or all of the VA's closing costs.
6. VA appraisal and inspection of the house
A VA-approved appraiser will determine the value of the house. This person will also help you determine whether the property meets the VA's minimum requirements.
It is at this stage that a home inspection is required, if it was agreed upon in the purchase and sale agreement. In general, you should not skip this stage. It will allow you to learn more about the property and back out if you cannot convince the seller to make certain repairs before finalizing the sale.
7. Complete the mortgage underwriting process
Underwriters at the bank or lending institution will need additional documentation to assess your eligibility for the mortgage. Documents to be provided include proof of income, assets and other types of financial documentation. If the information is correct, you will be "approved to close."
8. Closing on the purchase of your new home
The closing stage is when you sign documents indicating your understanding and acceptance of the terms of the loan. Before the scheduled closing date of the loan, you will receive a document called a "closing disclosure," which will include a breakdown of the final closing costs.
Typical costs include finance charges, which range from 1.5 percent to 3.3 percent of the loan amount. In general, the higher the down payment, the lower the costs. There are also exceptions: Surviving spouses and veterans with service-connected disabilities do not have to pay finance charges.
One or two days before signing, a final inspection of the property may be conducted. Once all closing documents are signed, including the sales contract, you will receive the keys to your new home.
9. Deposit the certificate
After closing, the VA will return the Certificate of Eligibility to you with a note indicating that you have used (all or part of) your VA mortgage entitlement. Qualified borrowers may use their entitlement more than once to obtain a loan for a new home in which they plan to live.
Conditions for obtaining a VA mortgage loan
To obtain a VA mortgage loan, you must meet certain eligibility requirements. Specifically, you must intend to use the home as your primary residence and occupy it within 60 days of closing. You must also demonstrate that you have sufficient income and an acceptable debt-to-income (DTI) ratio.
Although there is no minimum credit score required to obtain a VA loan, approval depends on each lending institution, and many lenders require a credit score of 620 or higher.
How does obtaining a VA loan compare to other types of loans?
The process of obtaining a VA loan can take longer than conventional loans because additional documentation is required as part of the evaluation and inspection process. However, borrowers who qualify for a VA loan may obtain more favorable terms than a conventional mortgage or FHA loan.
Frequently asked questions about buying a home with a VA loan
What is the Certificate of Eligibility (COE)?
The Certificate of Eligibility (COE) is used to show that you meet the eligibility requirements for a VA loan. To obtain a COE you can apply through the VA eBenefits online portal, seek assistance from your mortgage lender, or apply by mail.
Does a VA mortgage loan require a home inspection?
The VA does not require a home inspection and there are no requirements for a home inspection. However, a home inspection is an important step to ensure that the property you wish to purchase is safe and suitable for habitation-don't skip this step.
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Finwower is a leading advertising-supported and independent comparison service. Finwower receives a part of the revenue as compensation from all the offers that you see on the website from various companies. Depending on the compensation, you will see where and how the products appear on the website. For instance, you can look at how the order appears in the listing category. Of course, many other factors impact the appearance of the products, like the credit approval likeliness of the applicants and the rules of the proprietary website. Of course, it should also be understood that you will not find all the available credit or financial offers available today at Finwower.
All the reviews you see have been prepared by the staff of the Finwower. Yes, these opinions are received by the reviewer and have not been approved or reviewed by other advertisers. It means that all the reviews you see are unbiased and presented accurately, including the credit fees and rates. If you are looking for the latest information, it is suggested that you head over to the top of the page and visit the bank's website to check the data. All the credits at Finwower are determined from the FICO® Score 8; this is one of the many types of credit scores you will find in the market. When the lender is considering your credit application, they may use various types of said credit score to determine whether you qualify for the credit card or not.