VA Home Loan FAQs
VA home loans from the Department of Veterans Affairs are a valuable resource for veterans, active-duty service members, and surviving spouses seeking to achieve their homeownership goals. However, the VA loan application process can be confusing, particularly if you haven't taken advantage of this benefit in the past. If you're interested in financing a home, the answers to these VA loan FAQs will help you through the journey.
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Eligibility FAQs
How Do I Qualify for a VA Loan?
To qualify for a VA home loan, you must meet the government’s service-time requirements, which differ for active service members and veterans. If you don’t meet these VA loan eligibility requirements, you can still qualify if you fall under a discharge exception, such as hardship, involuntary reduction in force, or service-related disability.Â
Do I Need a Certificate of Eligibility To Apply?
Lenders require you to submit a Certificate of Eligibility, or COE, to confirm you meet the service requirements for a loan. The lender can usually obtain your COE using your Social Security number and date of birth, or you can request a copy online.Â
Can I Use a VA Loan More Than Once?
You can reuse the VA home loan benefit multiple times if you haven’t used all your entitlement, the amount of money the VA promises to repay to a lender if you default on your loan. If you have remaining entitlement and still meet the VA home loan eligibility requirements, you can apply for another VA loan.Â
Can Surviving Spouses Apply for a VA Loan?
You can apply for a VA loan if you’re the spouse of a veteran who is missing in action, is a prisoner of war, died while in service, or died due to a disability related to their service. Surviving spouses who haven’t remarried can request a COE to prove they qualify.Â
Credit and Financial FAQs
What Credit Score Is Needed for a VA Loan?
The VA hasn’t set a minimum credit score, but most lenders require a score of 620 or higher. If your score is low, you can pay down debts and correct errors on your credit report to increase it.Â
How Do I Check My Credit Before Applying for a VA Loan?
Check your credit by requesting a copy of your report from any of the three major credit bureaus: Equifax, TransUnion, and Experian. You can obtain this report for free once a year, and many banks and credit card companies offer ongoing access to your credit score.Â
Does a VA Loan Have Income Limits?
The VA doesn’t have specific income requirements to qualify for a loan, but lenders will look at how much you earn and decide if you have enough residual income to afford a loan. The VA does have loan limits, which are caps on how much the VA will guarantee to your lender.Â
What Is the Debt-to-Income Ratio Requirement for VA Loans?
Government guidelines instruct lenders to scrutinize a borrower’s financial information ​​more closely if their debt-to-income ratio, or DTI, exceeds 41%. You can reduce your DTI by paying down some of your current debts or increasing your income through a second job or a raise.Â
Property and Home Purchase FAQs
Can I Buy a Second Home With a VA Loan?
The VA loan program allows you to buy a second home if you plan to use it as your primary residence and have remaining entitlement. You can sell your current home to restore your full entitlement, or relocate from your first home and use it as a rental. However, you cannot purchase a second home as an investment property.Â
Can I Buy a Foreclosure or Short Sale Property With a VA Loan?
You can use a VA loan to buy a property via a foreclosure or short sale as long as it meets the government’s minimum property requirements, or MPRs. A VA appraiser must evaluate and approve the home, and the loan process may be more complicated.Â
What Are the VA's Minimum Property Requirements?
MPRs are the government’s requirements for safety, structural soundness, and sanitation. They protect veterans and service members from purchasing potentially dangerous homes. If an appraiser determines a home doesn’t meet these criteria, the seller must repair the issues for the lender to approve the loan.Â
Can I Use a VA Loan for New Construction?
You can use a VA loan to build a new home and receive the same advantages as when buying an existing structure. Construction loans are one of several types of VA home loans, and lenders may have stricter requirements and ask for additional documentation when you apply.Â
Funding Fee and Costs FAQs
What Is the VA Funding Fee, and How Much Is It?
The VA funding fee is a one-time fee you pay when receiving a home loan. The amount depends on the size of your loan, whether you make a down payment, and whether this is your first VA loan; however, the fee ranges between 1.25% and 3.3% of your total loan amount.Â
Do I Have To Pay for Closing Costs?
Your lender will determine whether and how much you have to pay in closing costs, which cover expenses such as real estate agent commissions, appraisal fees, title insurance, and VA funding fees. They differ based on the amount of your loan, the property location, and lender fees.
Can the Seller Pay for My Closing Costs?
The VA allows you to request that the seller cover your closing costs, so you don’t have to pay them. Some lenders also allow borrowers to roll their closing costs into their loans, thereby avoiding upfront payments.Â
What Are ‘Non-Allowable Fees’ in a VA Loan?
The VA prohibits lenders from charging borrowers certain fees when issuing a VA home loan. These non-allowable fees include application fees, escrow fees, and prepayment penalties. Lenders can waive them or charge them to other parties, including the seller or real estate agent.Â
Loan Process and Timeline FAQs
How Long Does It Take To Get a VA Loan Approved?
The time period for getting a VA loan approved depends on your financial details, whether the home requires any repairs, and the lender’s schedule. You can generally expect to wait around 30 to 50 days from the time you apply to the closing date, but the timeline for each stage varies. For example, it usually takes approximately five business days to receive your COE, but you might experience delays if you don’t upload the proper documents.Â
What Documents Do I Need To Apply for a VA Loan?
When applying for a VA loan, you need to provide personal and financial documents, including the following:Â
- Government-issued identification
- Pay stubsÂ
- Tax returns
- Bank statements
- COE
Your lender may request additional documentation to verify that you have a stable income and employment.Â
Do I Need an Appraisal for a VA Loan?
The VA requires homebuyers to obtain a home appraisal to qualify for a VA loan. The appraiser will examine several aspects of the property, including the roof, paint, and electrical, heating, and cooling systems. If they find problems with safety or structural integrity and the seller won’t fix them, the VA won’t guarantee your loan.Â
Special Circumstance FAQs
Can I Apply for a VA Loan if I’m Self-Employed?
You can apply for a VA loan if you’re self-employed. However, the lender will require documentation showing a reliable source of income. Plan to give them tax returns, profit and loss statements, and bank statements.Â
What if I’ve Had a Bankruptcy or Foreclosure?
If you’ve had a bankruptcy or foreclosure, you can still apply for a VA home loan after the waiting period. In most cases, the waiting period for a VA loan is two years from the date of a Chapter 7 bankruptcy discharge or a foreclosure. The waiting period for a Chapter 13 bankruptcy may be as little as one year from the filing of your bankruptcy petition, and not the discharge date. However, you will need permission from the Chapter 13 bankruptcy trustee to take on new debt like a mortgage.Â
What Happens if I Change Jobs During the Loan Process?
Changing jobs could delay the VA loan approval process because the lender will need to reevaluate your finances. Moving to a position with equal or higher pay usually doesn’t have a significant impact, but taking a lower-paying or commission-based role could cause the lender to deny your loan. Inform your lender right away if you change jobs before closing.
VA Loan vs. Other Loans FAQs
What Are the Differences Between a VA Loan and a Conventional Loan?
A VA loan is government-backed and is only available to veterans, active-duty service members, and surviving spouses, whereas conventional loans are open to everyone. VA home loan benefits include lower interest rates and more lenient credit requirements than conventional loans. Additionally, conventional loans may require significant down payments and private mortgage insurance, whereas VA home loans do not. Â
How Does a VA Loan Differ From an FHA Loan?
VA and Federal Housing Administration, or FHA, loans are both government-backed, but FHA loans are available to all qualified buyers. Unlike a VA loan, most FHA loans require a minimum down payment.Â
Should I Choose a VA Loan or a USDA Loan?
If you qualify for both VA and USDA loan programs, a VA loan is often the better option. USDA loans have limits on location, property types, and maximum income, while the VA loan program is more flexible. Â
General VA Loan Information FAQs
What Is a VA Home Loan Preapproval?
A VA loan preapproval is a letter you receive from a lender stating the amount of money they are willing to lend toward your home purchase. This document helps determine the price range to consider when looking at homes and strengthens your offer by showing you’re a serious buyer. Â
What Is the Notice of Value, or NOV?
The Notice of Value, or NOV, is a document issued by the VA stating the appraised value of a property. It lists any conditions the property must meet for the government to guarantee the loan.Â
How Does the VA Appraiser Determine the Property Value?
A VA appraiser determines the value of a home by assessing comparable properties and evaluating the home’s condition. They check several similar homes in the area to determine a reasonable value for the current market.Â
Can I Make Additional Payments or Pay Off My VA Loan Early?
You can make extra payments on the principal balance of your VA home loan if you want to pay it off more quickly. This allows you to reduce the total interest paid over the life of the loan.Â
Ready To Apply for Your VA Home Loan?
VA loans are a great opportunity for qualified veterans and service members, including first-time homebuyers. They allow you to purchase a property without putting money down, making homeownership an achievable goal even if you don’t have significant cash on hand. Getting answers to these commonly asked VA loan questions and starting the application process are critical first steps on the path to owning a home.Â
