VA Home Loan Process
If you’re a current military member or veteran looking to buy, build, or improve a home or refinance a current home loan, you may be overwhelmed with your options and the process. Fortunately, you may qualify for a VA home loan—a valuable benefit designed to make this journey easier. These loans offer benefits like zero down payment, no private mortgage insurance, and competitive interest rates. Here’s what you need to know about the VA home loan process.
On This Page
- What Is a VA Home Loan?
- How Long Does the VA Loan Process Take?
- Step 1 – Determine Your VA Loan Eligibility
- Step 2 – Obtain Your Certificate of Eligibility
- Step 3 – Get Preapproved for a VA Loan
- Step 4 – Find a VA-Approved Property
- Step 5 – Make an Offer and Get a VA Appraisal
- Step 6 – Go Through VA Loan Underwriting
- Step 7 – Closing on Your VA Home Loan
- Common Challenges and How To Overcome Them
- Frequently Asked Questions
- Ready To Apply? Here’s What To Do Next
What Is a VA Home Loan?
A VA loan is a government-insured home financing option only available to active-duty service members and eligible veterans. While there are some eligibility requirements, such as minimum service or discharge criteria, most active duty members, veterans, and their families are able to take advantage of this valuable benefit.
The VA doesn’t issue the loans directly. VA home loans are issued by private lenders. However, the VA guarantees a portion of the loan amount, thus encouraging lenders to offer better terms. When you apply for a VA loan, you will work with a VA-approved lender.
While a VA home loan offers many advantages over conventional loans, such as not requiring a down payment or private mortgage insurance, you’ll want to understand the VA loan process to increase your chances of success.
How Long Does the VA Loan Process Take?
In general, the process of buying or refinancing a home with a VA loan takes anywhere from 30 to 50 days, not including the time it takes to complete the preliminary VA loan steps. Some factors that impact the speed of your approval include your choice of lender, preapproval readiness, the time to obtain a Certificate of Eligibility, appraisal time, and any complex property issues.
Step 1 – Determine Your VA Loan Eligibility
To get a VA loan, you must meet the agency’s criteria, which covers factors like military service, income, and property type.
Service Requirements
Active duty service members typically qualify after 181 days of continuous service during peacetime or 90 days during wartime. Veterans are generally eligible if they meet the same criteria, but the exact criteria depend on the dates served. Reservists and National Guard members usually qualify after six years of service. Surviving spouses may qualify if their spouse died in the line of duty or due to a service-related disability, and they have not remarried.
Disability Status
Disabled veterans who meet other requirements are eligible for a VA home loan. Specifically, nothing about your disability rating will negatively impact your application. In fact, a service-connected disability can exempt you from paying the VA funding fee. Your VA disability benefits count as income toward qualifying for a mortgage. If you have recently been approved for VA disability, you may also be entitled to back pay.
Step 2 – Obtain Your Certificate of Eligibility
A Certificate of Eligibility, or COE, shows you meet the initial eligibility for a home loan. You will likely need to present several documents to the VA to get your COE. These include the following:
- Driver’s license or your government-issued ID
- Signed statement of service if you are active-duty military
- Discharge or separation papers if you are a veteran
- Marriage certificate if you are a surviving spouse
- Recent financial information, including bank statements, pay stubs, and W-2s
You can apply for a COE through the eBenefits portal on the VA’s website or have your lender do this for you. If you don’t want to apply online, you can do so via mail, but this will likely delay receipt of the COE.
Step 3 – Get Preapproved for a VA Loan
Getting preapproved for a VA loan is the next important step in the VA loan process. Once you select a mortgage lender, you will provide the documentation they need to preapprove your loan. Preapproval gives you a good idea of your purchasing power and adds weight to any offers you make.
To get VA loan preapproval, you should be prepared to submit the following documentation:
- COE, if you have received it
- Government-issued ID
- W-2s and pay stubs for the past two years
- Disability award letters
- Documentation of disability payments, if you receive them
Your lender will run your credit report during this process. While the government doesn’t set a minimum credit score, individual lenders usually have credit requirements of at least a 620 score.
Lenders will also review your income and outstanding debt to ensure you can cover your monthly expenses. An acceptable debt-to-income ratio is usually no greater than 41%. If you fall outside any of these ranges, you can work on improving your financial situation or look at home loans for bad credit borrowers as an option.
Step 4 – Find a VA-Approved Property
Once you are preapproved for a loan and know how much money you can borrow, you can start shopping for a home. Working with a real estate agent who understands VA loans is beneficial because only certain homes will qualify, and the process can be confusing.
A VA loan only applies toward a home you intend to live in as your primary residence. You can purchase a single or multi-family home with VA loans. In addition, you can finance a mobile home if it is attached to a permanent foundation and meets other VA requirements. You can also use a VA loan to buy a condo or townhome in a VA-approved community or build a new home if you are buying directly from the builder.
If you are unsure whether the home you like will qualify, you can consult the VA’s Minimum Property Requirements, or MPRs. These are the criteria the VA uses to approve homes, which VA appraisals use to ensure the home is move-in ready and safe.
Step 5 – Make an Offer and Get a VA Appraisal
Once you find a home you like, your real estate agent can help you make a purchase offer. Your agent will research other sales in the area to determine a fair price and place the proper contingencies in your offer to protect your interests. For example, you might want to walk away from the deal if the home fails inspection or the VA appraisal comes back lower than the sale price.
Once you have a signed purchase and sale agreement with the seller, you have a short period to complete several tasks. The first is the home inspection. A certified inspector will examine the home to ensure it is structurally sound, everything works, and it has no safety hazards. A VA-approved appraiser will assess whether the property meets the VA’s property condition requirements, or MPRs, and provide an estimated value for the property.
While an inspection is highly recommended, the VA appraisal process is mandatory. Both generally occur one to two weeks after you and the seller sign a home purchase contract.
After the inspection and appraisal, you may re-enter negotiations with the seller. However, if the home doesn’t qualify for a VA loan, you generally can cancel the deal. If the appraisal is lower than the asking price, you can either walk away or renegotiate the deal.
Step 6 – Go Through VA Loan Underwriting
Before you can close on a VA loan, it must undergo the underwriting process. Your purchase agreement and appraisal will go to loan processors, who will assess your purchasing ability and the deal itself.
You may receive conditional approval from the underwriters, or they might request additional documentation. Typically, this process takes a few weeks, allowing you to move closer to closing.
Step 7 – Closing on Your VA Home Loan
The last step in the process gets you to the finish line, where you will finally get the keys to your new home. The title company should send you a disclosure form shortly before closing that allows you to review the final closing costs and loan information. Your lender will confirm that your loan is within the VA home loan limit, which varies by your entitlement and where you plan to purchase a home.
VA loans typically include a funding fee and other closing costs. The funding fee is a one-time fee paid to the Department of Veterans Affairs to cover the cost of running the program. It can range from 0.5% to 3.3% of the loan amount. Closing costs, which are separate from the funding fee, can range from 2% to 6% of the purchase price.
You should also have a chance to do a final walk-through of the property to verify that any negotiated repairs were completed and items that are supposed to be included, like window coverings and appliances, are still in place. If you require any special home adaptations or structural alterations due to a service-connected permanent and total disability, a veteran housing allowance might help.
Common Challenges and How To Overcome Them
While VA home loans offer many benefits, they can also present a few drawbacks. Here are just a few common challenges and how you can overcome them:
- Appraisal issues: Due to the VA’s Minimum Property Requirements, appraisals can be challenging. VA appraisals specifically focus on things like safety, mechanical soundness, and structural issues, so older homes may not get the outcome you need. Working with a professional and choosing the right home can help address these issues.
- Documentation delays: When you apply for a VA loan, you are dealing with the government, so delays are common. Typical reasons for delays include incomplete or missing documents, errors in application information, and difficulty verifying data. You can minimize these by submitting the most accurate and complete application possible.
- Credit or debt-related delays: If your credit is poor or you have a high debt-to-income ratio, you may not qualify for a VA loan. You can address this by paying down existing debts, finding ways to increase your income, or possibly using a co-borrower.
Frequently Asked Questions
The answers to these common questions can help you navigate your VA home loan process. We also answer questions regarding disability benefits and appeals, and provide video resources for additional perspectives.
How Do I Get a VA COE Fast?
The fastest way to get your VA COE is to have your lender apply for it on your behalf through the VA’s eBenefits portal. You can also apply for the COE on your own through the portal, which is faster than applying via mail.Â
What Disqualifies Me From a VA Loan?
You may be disqualified from a VA loan if you were dishonorably discharged, cannot verify your income, have a high debt-to-income ratio, or select a property that doesn’t meet minimum requirements. However, VA home loan requirements are generally less strict than those for conventional loans.
Can I Use a VA Loan for a Fixer-Upper?
Yes, you can use a VA loan to purchase a fixer-upper, but you must apply for a specific type of loan called a VA rehab loan or a VA renovation loan. This allows you to bundle the cost of the home and your repairs or renovations.
What if My VA Appraisal Comes in Low?
The VA may not approve your purchase if the appraisal comes in lower than the purchase price. If this happens, you can try to renegotiate the purchase price, pay the difference, or cancel the deal.
Do I Need a Down Payment or PMI?
No, you typically don’t need a down payment or have to pay private mortgage insurance with VA loans. These loans are designed to offer service members and eligible veterans benefits without these additional items.
Ready To Apply? Here’s What To Do Next
If you’re ready to begin your journey toward home ownership with a VA home loan, the first step will be to check your eligibility and speak with a lender. We will connect you with our trusted partner, Novus Home Mortgage, who can help answer your questions.
Contact us today for personalized assistance.
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