What is a VA Loan?
A VA loan is a mortgage option that only veterans, service members, and some military spouses can claim. Since the U.S. Department of Veterans Affairs guarantees a portion of the loan, you are likely to receive better terms for your loan — such as low down payments.
However, you may be required to meet different standards compared to a traditional loan. Don’t worry though. We’re here to help walk you through the process.
Your Guide to VA Home Loans
The VA Loan Process
1- VA Loan Preapproval
Going through a prequalification process is essential. It reveals whether or not you are eligible for a loan and how much you may qualify to obtain. It’s a non-binding step that can help you compare terms and rates.
2- House Hunt
Once you’re preapproved, you can search for the ideal home. Most VA loans can cover just over $480,000, so keep that in mind during your search.
3- Contract Negotiation
Once you find the ideal home, you need to get it under contract. You do this by working with your agent to create and sign a purchase agreement. Before this step, you should strongly consider having the house appraised and inspected.
4- VA Loan Underwriting
Underwriting services include the final review of your loan file. An underwriter carefully assesses your finances to determine how much risk the lender will take by granting you a loan.
5- Loan Closing
Closing the loan is the final step of the VA loan process. You’ll sign the last set of binding documents at this point in the process. The home is yours at the end of the closing process!
Eligibility Requirements for VA Loans
1- Loan Certificate of Eligibility
You’ll need to provide proof of your service if you want to get a VA loan. A Certificate of Eligibility (COE) shows lenders that you meet VA loan service requirements.
2- Documents Needed to Obtain a COE
You need certain documents to claim your COE. These include:
- A copy of your separation or discharge papers if you’re a veteran
- A signed statement of service signed by your personnel officer, commander, or adjutant if you’re an active-duty service member.
3- How Spouses Can Obtain a COE
If you’ve become a surviving spouse of a veteran, you’ll need to acquire the discharge documents of your veteran, if possible. You’ll also need to request, fill out, and submit VA Form 26-1817.
If you’re not receiving DIC benefits and need to obtain a COE, prepare the following:
- A copy of your marriage license
- A completed DIC, Death Pension and/or Accrued Benefits form
- A death certificate
4- Additional VA Loan Eligibility Requirements
- You must be currently on active duty or honorably discharged.
- You must have at least six years of service in the Selective Reserve or National Guard.
- You must have a minimum of 181 days of consecutive active service during peacetime,
- OR90 days of continuous active service during wartime.
5- VA Loan Income and Credit Requirements
- You must be able to afford the home you’re financing.
- You must have a full-time income (at least 30 hours per week).
- If you have part-time income, you must have at least a two-year history of working part-time with a likelihood that you will continue.
- You must have a qualifying debt to income ratio.
- You must meet the lender’s minimum credit score requirements.
Frequently Asked Questions About VA Loans
How Can I Qualify for a VA Loan?
You may qualify for a VA loan if you have done the following:
- Put in 90 consecutive days of active service during wartime
- Put in 181 active days of service during peacetime
- Have spent six years serving in the National Guard or Reserves
- Are the surviving spouse of a service member who died in the line of duty or because of a service-related disability
- Meet other loan requirements
Who Sets VA Loan Rates?
The lenders who originate VA mortgage loans set the VA mortgage rates based on the market. The Texas Veterans Land Board sets standards for Texas Veteran Loans.
How Much Money Do You Need for a Down Payment?
VA mortgage loans do not require you to make a down payment.
What if I Have Past Credit Problems?
It’s still possible to get a VA home loan even if you have bad credit. Different lenders may have different minimum credit score requirements. Some lenders may be willing to dip below the 620 FICO score cutoff when extending VA mortgage loans.