JoshuaSecuring a VA home loan can feel like a complicated process, but it doesn’t have to be. This detailed guide will unveil everything you need to know to get approved for a VA loan and purchase your dream home. From understanding your VA eligibility to selecting a lender, we’ll cover it all and answer your most pressing questions along the way.
Understanding VA Loan Eligibility
The first step is determining if you’re eligible for a VA home loan. To qualify, you must meet at least one of the following criteria:
- Complete a minimum of at least 90 days of active duty military service (not including training) and receive a discharge other than dishonorable.
- Be currently serving on active duty.
- Be the spouse of a deceased service member who passed away on active duty or from a service-connected disability.
Aside from those basic eligibility requirements, there are also service-connected disability compensation limits and residency requirements you’ll need to meet. The VA provides a helpful eligibility checklist to walk through the specifics. If you’re uncertain about your eligibility status, it’s best to consult with a local loan officer who can review your military records and provide a definitive answer.
Choosing a Lender
Once you’ve confirmed VA eligibility, it’s time to start shopping for potential lenders. Some of the best places to apply for a VA home loan include:
VA-Approved Lenders
There are thousands of VA-approved lenders across the country, including large national banks, small local banks, and mortgage companies. To qualify to offer VA loans, lenders must maintain VA approval status – look for this designation when researching options. Popular approved lenders include Wells Fargo, US Bank, and Veterans United Home Loans.
Credit Unions
Many credit unions cater specifically to members of the military community and offer VA loans at competitive rates. Some top credit union choices are Navy Federal Credit Union and PenFed Credit Union.
Local & Regional Lenders
Don’t forget to consider lenders in your local area too. Smaller hometown banks often provide personalized service and understand the local real estate market well. Search online reviews to find recommended local options.
When comparing lenders, look at interest rates, fees, customer service reputation, and track record of VA loan processing time. Ask about pre-approval so you can make strong offers once you find the right home to buy.
VA Loan Types
The VA offers two main loan types to choose from:
The VA Regular Home Loan has no minimum down payment required. However, you will have a funding fee within the range of 1.4% to 3.6% of the loan amount, depending on your military history and VA disability status. The fee can be financed as part of the loan.
The VA Interest Rate Reduction Refinance Loan (IRRRL) allows eligible veterans to refinance existing VA loans into a new VA loan with potentially better interest rates and terms. No appraisals or funding fees are required.
In some cases, the VA Supplemental Loan or VA Adaptive Housing Grant may also be an option – consult with a loan officer about your specific needs and eligibility. Regardless of which type you choose, VA loans offer several other benefits, such as no private mortgage insurance requirement.
Pre-Approval and Shopping for a Home
Once you have selected a lender and received pre-approval, you’ll want to start shopping for your perfect home. Having pre-approval in hand is key, as it shows sellers you’re a serious buyer and allows you to make competitive offers.
During pre-approval, your lender will:
- Verify income, assets, credit, and VA eligibility
- Determine how much you qualify to borrow
- Provide a pre-approval letter stating your buying power
Many lenders now offer online pre-approval applications for quick initial reviews. But you may need to provide additional paperwork like tax returns, bank statements, pay stubs, and military paperwork for full underwriting.
While searching for homes, be sure to consider neighborhoods near amenities and work, homes sized correctly for your needs and condition, and of course, staying within your budget. Once you find “the one,” work quickly to make an offer.
Learn more negotiation tactics, including an appraisal gap waiver and contingencies. With a pre-approved VA loan, the seller knows financing won’t fall through, making your offer more attractive than conventional offers.
Applying for the Loan
Once you go under contract, it’s time for the formal VA loan application process with your lender. Expect to provide additional documentation including:
- Military paperwork like your DD-214
- Proof of VA disability rating (if applicable)
- W-2s, tax returns, and pay stubs for the last 30 days
- Bank/asset statements for reserves/down payment funds
- Home inspection results
Your lender will collect all information, order your credit report and verify employment. They’ll submit your loan to the VA for issuance of a Certificate of Eligibility, confirming your eligibility status.
The VA will then request an appraisal from one of their approved fee appraisers. Expect the appraisal process to take 1-2 weeks on average, depending on area demand.
After all conditions are met, including an appraisal value at or above the agreed sale price, your lender will be able to close on your VA loan! Closing dates usually fall between 30-45 days from contract signing.
VA Loan Closing Process
In the last few weeks leading up to closing, expect this to occur:
- Your lender will provide final closing disclosures and paperwork
- You’ll need to provide any remaining funds, like your down payment
- The title company will investigate the property’s ownership history and draw up documents
- You and your realtor will do a final home inspection walkthrough
- Funding from your lender will be sent to the title company
- You’ll attend your closing meeting to sign paperwork and obtain keys!
Your lender is there to guide you through the entire process. Make sure to ask questions and confirm all necessary items are completed prior to the closing date to ensure a smooth transaction.
With a VA loan, expect a quick and efficient closing. Many borrowers cite their VA loan experience as being less stressful than conventional options, thanks to streamlined approval and funding.
Moving In & VA Benefits
Congratulations, you now have the keys to your new VA-financed home! Be sure to contact your lender if you have any post-closing questions. Also explore additional VA benefits you may qualify for like:
- Disability compensation and services through the VA healthcare system
- VA-backed home loan funding limits that increase each year
- Education benefits for military members and their dependents
- Life insurance and specially adapted housing grants
- Burial allowances and survivor benefits
Your service to our country comes with valuable financial and healthcare rewards earned over a lifetime. Make the most of your VA loan and take pride in your new beginnings in your home financed by the VA. Thank you for your sacrifice and service – enjoy this well-deserved benefit.
You’re now all set up for VA homeownership success. But as with any major purchase, it never hurts to be prepared with answers to common questions that may come up along the way.
FAQ
Q: How do I find a VA-approved lender near me?
The VA provides a search tool on its website to locate VA-approved lenders by zip code or city/state. You can also check reviews from sources like NerdWallet or Bankrate to find top recommended local options.
Q: What credit score do I need for a VA loan?
Unlike with conventional loans, the VA does not have strict minimum credit score requirements. However, most lenders prefer scores of 620 or above. With a score below 620, you may pay a higher interest rate or have tougher debt-to-income ratio limits. However, the VA focuses more on your ability and willingness to repay than just credit alone.
Q: Is there a limit on how much home I can buy with a VA loan?
Yes, the VA sets maximum loan limits each year based on the average area home prices in different counties/metro areas. In 2022, the national median loan limit is $647,200. Check the VA Loan Limits Tool for your specific county limit.
Q: Can I use my VA home loan benefits multiple times?
Of course, you can use your VA home loan benefits on multiple properties over the course of your lifetime. However, there are some important caveats:
- You can only have one VA loan on a primary residence at a time. So, you’d need to pay off the first home before taking out another VA loan.
- For investment properties, you can have up to 4 total VA loans (including primary residences) with a maximum aggregate loan amount of $omanageradva_madeloann_06) at one time.
- At least one property financed with a VA loan must be your primary residence unless you’ve already used the benefit previously as a homeowner.
Q: Can I get a VA loan without a down payment?
Yes, one of the major advantages of a VA home loan is that it allows eligible veterans to purchase a primary residence without requiring any down payment. You will still be responsible for closing costs, which can often be rolled into the loan amount. Just keep in mind there is a VA funding fee that ranges from 1.4-3.6% of the loan amount, which is either paid in cash or can be financed into the loan as well.
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