How to Apply for a VA Home Loan
Getting a VA loan to buy a home could be one of the best things you ever do if you are a soldier, active-duty service member, veteran, or surviving spouse of a veteran. There is no need for a down payment, the interest rates are low, and there is no private mortgage insurance. What's not to love?
However, the process can be too much to handle if you’ve never done it before. But don’t worry! We're here for you. This guide will walk you through the VA loan process step by step.
You can take the first step right now by applying for Rate's Digital Mortgage. It’s quick and easy, and the goal is to help you get pre-approved quickly so you can move forward with confidence!
What Is a VA Loan?
VA loans are backed by the U.S. Department of Veterans Affairs (VA), which lowers the risk for lenders and lets those looking for a VA loan get better terms.
With this loan program, veterans, active-duty service members, national guard members, and eligible living spouses can buy or refinance a home with little to no down payment.
VA Loan Eligibility
You have to meet certain military service-related standards in order to get a VA loan. Most of the time, these standards depend on how long you served, how you were discharged, and what kind of job you had in the military.
In general, you should be able to get VA loan benefits if you spent 90 days of active duty (including at least 30 consecutive days) during a war or 181 days during peacetime.
VA loans can also be given to the spouses of service members who have died, gone missing in action, or have passed away due to a service-related disability.
Before you start the application process, you should check with the VA home loan program to make sure you are eligible.
Step 1: Gather Required Documents
Getting all the documents you need together will speed up the process and stop delays that aren't necessary. You'll need the following:
Proof of Service
This can be a copy of your DD214 (Certificate of Release or Discharge from Active Duty) or, if you're still in the military, a record or statement of service.
You’ll also need to get a VA Home Loan Certificate of Eligibility (COE) either from the VA's eBenefits site to request a COE online, or we can help you get one. The COE VA form is an important document because it shows that you meet the VA loan standards.
You might still be able to get another VA loan if you've already had one, but the COE will need to show this.
Financial Documents
Whether you’re looking for a first-time home purchase or a cash-out refinance, VA lenders will look at your income to see if you can afford to pay back the loan and to help you get competitive loan rates. Make sure you grab your tax returns, pay stubs, or any other important financial papers.
Proof of Identity
To prove who you are, you need a legal government-issued ID, like a driver's license or passport. This helps make sure that the application can be processed without any problems.
Step 2: Find a VA-Approved Lender
Rate is a VA-approved lender with lots of experience in VA loans and can guide you through the process.
When you choose us, we’ll help you understand the different loan choices, such as fixed-rate or adjustable-rate mortgages, and will figure out how much you can borrow based on your current financial situation.
Step 3: Submit Your Application
The next step is to fill out our digital mortgage application. For this, you’ll need to give basic information about your finances like your income, assets, debts, and work experience.
You should also be ready to talk about your time in the military. To see if you are eligible for a VA loan, the VA needs to know about your service experience.
You need to send in your application along with the proof you have in Step 1. Before going on to the next step, we’ll carefully look over your application and make sure the information you've given is correct.
Step 4: Underwriting and Loan Approval
In this phase, Rate or other lenders will conduct underwriting to evaluate your financial stability and repayment ability.
Factors like your income, credit background, and the ratio of your debts to your income will be considered. To get a VA loan, you don't need a certain credit score, but at Rate, we typically require you to have a score of at least 620.
Depending on things like your income and general financial health, some lenders may be more willing to work with you.
After the underwriting is done, the lender will let you know their decision. If you get the loan, you'll get an estimate that lists the loan terms like the interest rate, loan amount, loan limits, and monthly payments.
This is a very important step because it sets the financial rules for the rest of your loan.
Step 5: Close on Your Loan
It's time to close on the loan once you've been accepted. When the deal is closed, all the paperwork is signed and the money is given out.
Lenders will give you a closing statement before the closing. This will list all the fees and costs that come with your loan, like appraisal fees, title search fees, VA funding fee, origination fee, and other closing costs. It's important to read these fees carefully because they are different.
You’ll also have to pay any closing costs at this point. When everything is ready and you've signed all the papers, you'll get the keys to your new house!
You can move into your new home with the help of your VA loan after the last step in the loan process, which is closing.
What are VA Home Loan Eligibility Requirements?
Now that you know how the VA home buying process works, it's time to learn more about the specific VA loan standards you'll need to meet. For the loan to go through, these loan application requirements help make sure that the borrower has enough money or financial stability to repay the loan.
Credit Score Requirements
While the VA doesn't set a minimum credit score, most lenders do. A score of 620 or better is usually needed, but some lenders may be more flexible if they see other things, like your income or the ratio of your debt to your income.
You might be able to get a better interest rate if your credit score is higher, but you can still apply for a VA-backed home loan even if your score is lower.
Income Requirements
For VA loans, the VA doesn't set an exact income requirement, but it does look at how well you can pay back the loan. To figure out how much you can spend, lenders usually look at how much money you make, how much debt you have each month, and any other debts you have.
To improve your chances of getting approved for a VA mortgage, keep your debt-to-income ratio low.
Minimum VA Property Requirements
When applying for a VA loan, there are key minimum property requirements to make sure the home meets safety and livability standards. These include the following:
- Safety and Structural Integrity: The home must be free from significant hazards, including structural defects, pests, or unsafe conditions like lead paint if built before 1978.
- Functional Systems: All systems like heating, plumbing, and electrical must be in working order. The home must also have a secure roof and foundation, with no major repairs needed.
- Occupancy: The property must be intended as your primary residence. Veterans typically must live in the home for at least one year after purchase.
- Appraisal and Inspection: VA-approved appraisers will assess the property to make sure it meets these standards, which may require repairs before final approval.
A trusted real estate agent who is knowledgeable about VA homes can provide you with more guidance on VA property requirements.
How Many VA Loans Can You Get?
It's true that you can get as many VA loans as you want, but the most you can borrow is limited with VA loan limits and your entitlement. You can get another VA loan after paying off the first one.
But if you already have a VA loan and are still paying it off, you should check with your mortgage company to see if you have enough entitlement to get another loan.
Can You Buy Land With a VA Loan?
You can use a VA loan to buy land. Since the VA loan is meant to help veterans buy homes, any land you buy must be used for living. You also have to be able to build on the land if you want to build a house in the future.
Can You Use a VA Loan for an Investment Property?
No, you can't use a VA loan to buy a rental property. The VA loan is meant to help soldiers get a house for themselves and their families.
You can use a VA purchase loan to buy a property with more than one unit, though, as long as you live in one of the flats.
Can a VA Loan Be Used for a Second Home?
No, VA loans aren't for buying second homes. These programs are meant to help veterans buy their first home. To buy a second home, you'll need to look into other ways to pay for it, like a standard loan or using your home equity for another loan type.
Can a Child of a Veteran Get a VA Loan?
Most of the time, children of soldiers can't get this VA home loan benefit. But there may be different ways to get around this service requirement. Some children may be able to get different types of help if their parents served in the military.
Start Your VA Loan Process with Ease
Getting a VA loan to buy a house can be a life-changing experience. The terms are great and the road to homeownership is clear. You can move forward with ease if you know about the different kinds of VA loans and how they work.
This is how the process works now that you have the right papers and a reliable partner like Rate.
Are you ready to move on? Rate's Digital Mortgage Application makes it easier and faster than ever to apply for a mortgage. Getting pre-approved is easy and only takes a few clicks. Start the process of becoming a homeowner today!
Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code.
Using funds from a Cash-out Refinance to consolidate debt may result in the debt taking longer to pay off as it will be combined with borrower’s mortgage principle amount and will be paid off over the full loan term. Contact Rate, Inc. for more information