Veterans and current members of the armed forces of the United States do a great service for their country, and in return, they deserve to be respected and appreciated. One way of expressing this gratitude is through services that offer benefits to these courageous men and women. In this article, you will learn how to apply for a VA loan.
VA Loan Requirements
For approval, borrowers must meet the eligibility requirements for VA loans. For example, the home must be used as the primary residence, and the applicant must have ample income and acceptable credit (although there is no minimum credit score). To begin applying for a VA loan, borrowers must meet the criteria to obtain a VA Certificate of Eligibility (COE).
Lenders will need you to submit documentation used to prove your employment history, current financial situation and credit score. The following documents may be required:
- A copy of your driver’s license or other government identification
- Bank, investing and retirement statements
- At least 2 years’ worth of W-2 statements
- Copy of your DD Form 214
- Recent pay stubs
- The last 2 years of tax returns for those who are self-employed, 1099 or rental income.
- For active service member, a statement of service letter which should be signed by your commanding officer
- Disability award letters
Step 1: Check if you are eligible for a VA Loan
VA loans are a significant benefit for eligible service members, veterans and their living spouses. The list of those who qualify for this house buying military support include:
- For an active duty member, qualifies after serving 181 days during peacetime.
- During wartime, active duty member qualifies after serving 90 consecutive days.
- For National or reserves, qualify after serving for more than 6 years.
- Are married to a military member who died while on duty or due to service-connected disability.
First, you will need to submit your Certificate of Eligibility to prove that you meet the service criteria for a VA loan. If you are a veteran, you should also submit your Certificate of Release, DD Form 214 or Discharge from Active Duty.
Step 2: Shop for a VA approved lender
In most cases, it might appear as any lender will do. However, if you research thoroughly, you may find out that not all lenders are the same. First of all, lenders must be approved by the United States Department of Veterans Affairs. Second, several lenders concentrate mainly on traditional loans, while others focus almost entirely on the military VA loan program. Using a VA specialist lender with thorough knowledge of the VA loan procedure vs a lender who only funds a handful of VA mortgages a year will turn into a more straightforward and faster loan process.
A loan officer can help you determine the types of documentation you need, and the amount of the loan you can qualify for. Shopping around is an excellent idea as offers offered by lenders will differ by interest rates, discount points and VA closing costs. Most lenders charge Veterans a 1% flat fee for VA home loan. It is also known as a “loan origination fee”. Also, lenders may charge you extra fees. In some situations, lender’s fees are negotiable.
Step 3: Securing a Certificate of Eligibility
This is the first step in getting a VA home loan. It guarantees your lender that you are eligible for the VA loan support. Besides that, COE enables the lender to know how much entitlement you will receive. An experienced lender can assist you in securing a COE. Moreover, it is not a must you get your COE before applying for a VA loan because most VA lenders can immediately pull your COE using VA’s automated system. Indeed, almost all VA loan COEs are obtained electronically, and two-thirds of certificates are given immediately, according to VA.
How to apply for a VA Loan Certificate of Eligibility
Here are the primary ways you can secure your Certificate of Eligibility for a VA loan:
- Applying through a VA approved lender
- Applying online through the eBenefits portal on the va.gov website.
- Applying by mail with VA Form 26-1880
Step 4: VA Loan Preapproval
Pre-qualifying is relevant but not required. By opting to do, you will save some time and possible surprises later in the procedure. First of all, pre-approval lets veterans and service members have a clear sense of their buying power. Second, it proves that you are a serious buyer to the house sellers and their real estate agents.
In the current real estate environment, house sellers expect you to have offers from pre-approved buyers. Some won’t even bother to check your purchase offer without a pre-approval letter.
To pre-qualify for your mortgage, you will have a candid discussion with your lender about your salary, credit score, employment history, marital status and other factors. Giving full information to your lender during the pre-qualifying phase will aid avoid surprises later in the underwriting. Furthermore, the pre-qualifying phase can disclose areas that require changing before you can be approved, such as debt-to-income ratio or credit. Although a letter of prequalification provides you with an approximate price range for house searching, it doesn’t guarantee that you’ll be approved for the mortgage.
Step 5: Make an Offer on a Home
Find a real estate agent who is familiar with VA loans and specialized in supporting military members. Veteran-friendly agents can assist you in finding out what to look for to maximize your benefits. Using your VA loan pre-approval letter, you can make an offer on the house. As soon as the seller agrees to your offer and you have a contract in-hand, notify your lender to start the next step.
Step 6: Finish Your Loan Application
Consult with your lender to finalize your VA loan application by presenting the required details like your home purchasing agreement.
Your VA loan application is sent to the underwriting before to the final approval. Underwriting is a final analysis of your loan file to ensure that everything follows the criteria set by the VA and the lender.
Your lender would need to verify your personal and financial details during the underwriting process. Once your file is reviewed, the underwriter gives you a clear to close, conditional approval or rejection.
Before closing your loan, your lender will meet with you and the seller to arrange a VA home valuation. This is a significant step in order to approve your application for a VA home loan.
Step 7: Close on your Loan and Move-in
Once your loan receives a clear to close, you are all set. You have to wait until the closing day to sign all your closing documents, and you will get the keys to your new home.