VA loans help military members, veterans, and eligible borrowers purchase homes and refinance existing loans. Their typical features, such as lower down payment requirements, reduced interest rates, and less restrictive credit minimums, make them a great option for borrowers.
The Veterans Affairs office backs VA loans, which assures private lenders that the loan will be repaid even if the borrower defaults. To apply for a VA loan, you must take steps to be approved. This guide will walk you through the steps and streamline the process.
Know the Requirements for a VA Loan
Before looking for a VA loan, you should have sufficient income and a good credit rating. Although the VA doesn't have set credit requirements, lenders will have overlays beyond the VA's guidelines that could affect your ability to be approved for this type of loan. Also, the home you intend to purchase must become your primary residence.
Apply for Your Certificate of Eligibility
To begin the loan process, you must show that you are eligible for the VA loan program. To be eligible, you must be a veteran, active-duty servicemember, member of the National Guard or Reserve, or the unmarried spouse of a service member who was killed on duty or due to service-related injuries.
You can apply on the VA's website, mail VA Form 26-1880, or work with your lender to obtain your Certificate of Eligibility. A VA-approved lender will have experience submitting Certificates of Eligibility, so it might be easier to go through them. Your local VA office is also a useful resource.
Shop Around to Find a Lender
Mortgage companies, banks, and credit unions participating in the VA program will typically list themselves as qualified lenders. Getting pre-qualified is essential in home buying. It shows sellers that you are serious about purchasing a home, and more likely to follow through because you have pre-qualified for a loan. This will also help you determine the price range of homes you qualify for. When interest rates are low, competing with other buyers for homes can make the process difficult. Some lenders offer programs that underwrite your loan upfront, taking you 75% through the loan process. This will make you a very appealing prospect to the seller.
Go House Hunting and Make an Offer
It's time to start looking around for homes that meet your criteria. Now that you’ve pre-qualified, make an offer on the home with your VA loan preapproval letter. When the seller accepts your offer, a contract will be established so your lender can begin the rest of the process. The sales agreement should include a "VA Option Clause," which states that the purchase is contingent on the home meeting the Department of Veterans Affairs guidelines.
Finish Your VA Loan Application
Now that you have agreed to purchase a home, it's time to finalize your loan application. Additional information and paperwork may be necessary. Your application will be submitted to underwriting. During the underwriting process, the underwriter will review your loan to ensure that you’ve met all the requirements of the VA and the private lender.
Your personal and financial information will need to be validated, so it is essential to provide any required documentation. Otherwise, it could delay the closing of your new home. Once the underwriter has completed the review, they will respond to your application for a loan. You will either be cleared to proceed, given conditional approval, or your application will be denied.
Are you ready to apply for a VA loan or have questions? Just give NASB's experienced VA mortgage team a call at 855-465-0753.
