Eligible veterans, active-duty military personnel, and survivors looking for a home can get financing through a VA loan. Guaranteed by the U.S. Department of Veterans Affairs and available from lenders nationwide, this type of mortgage tends to offer attractive fixed-rate loans with no down payment. VA loans are also known for their more flexible credit score requirements.
Here are some strategies for getting a VA loan.
How to Get a VA Loan: Step by Step
A typical VA loan process goes like this:
Step 1: Determine if you qualify for a VA loan
Before you consider purchasing a VA loan, make sure you meet the following VA loan eligibility requirements.
- Length of serviceIf you’re an active-duty military member, you’re eligible if you served at least 90 consecutive days (without a break in duty). For veterans, National Guard, and Reserve members, requirements vary depending on when you served. You can find this information on the VA website.
- Credit score: The government doesn’t set a minimum credit score required to get a VA loan, but the individual lenders who actually approve your mortgage probably do. If your credit score isn’t great (say, below 600), you’ll need to take steps to improve it or shop around for lenders who will review applicants with “fair” credit.
- Debt-to-Income Ratio (DTI): You’ll need to prove that you have enough income to cover your monthly debt payments and that you have an acceptable DTI ratio (usually no more than 41 percent, though some lenders might set you a slightly higher ratio).
You must also obtain a Certificate of Eligibility (COE) showing that you meet the initial loan eligibility criteria. To obtain a COE, check the eBenefits portal on the VA.gov website or contact the VA. Borrowers may also be able to apply through their lender.
To obtain your COE, you may need to present the following documents:
- Driver’s license or other government issued identification
- Recent financial information, such as W-2s, pay stubs, and bank statements
- If active duty military, a signed certificate of service
- If you are a veteran, your Discharge or Separation Certificate (also known as Form DD214)
- For surviving spouses, marriage certificate or marriage license
Additionally, there are limitations on how you can utilize a VA mortgage: While the VA will consider timelines of up to 12 months depending on your individual situation, you must use the home as your primary residence and plan to move in within 60 days of closing.
Step 2: Find a VA-approved lender
Once your eligibility is determined, you will need to find a mortgage lender that participates in the VA loan program. If you need help finding a VA-certified lender, contact a representative at your local Veterans Service Organization (VSO) who can provide you with a list of lenders in your area.
After you connect with a loan officer, he or she will help you determine what documents you’ll need and how much of a loan you can get. Different lenders have different interest rates, closing costs, and discount points, so be sure to shop around.
Step 3. Get pre-approved for a VA loan
If you want to know how to apply for a VA mortgage, the first step is to get pre-approved. Getting pre-approved for a mortgage shows the seller that you’re serious about buying a home and that the lender thinks you’re creditworthy to get a loan. This is a statement or letter that essentially states how much the lender will loan you. This isn’t a guarantee of a mortgage (you’ll need to show a specific property for an appraisal and sometimes provide additional documentation to get one), but it’s an important first step.
To start the pre-approval process, contact a VA-approved lender. You’ll submit an application and provide financial documents, such as bank statements and past tax returns. The lender will also check your credit score and conduct a hard credit check to determine your creditworthiness. The lender will use all this information to determine how much you can borrow and what interest rate you can expect.
Step 4. Find a home
Once you know your pre-approved loan amount, you can start your home search. Work with a real estate agent who understands VA loans, especially if they specialize in helping military personnel. A veteran-friendly agent can help you understand what to look out for to maximize your benefits.
Your agent’s job is to help you craft a strong offer and develop a sound negotiation strategy. Once your offer is accepted and you’ve finalized the details, you’ll then sign a purchase and sale agreement with the seller.
Don’t forget the contingencies. These can include how long it takes to get financing, the amount of the deposit required, your right to a home inspection, etc. They can also include the seller paying some or all of the VA closing costs.
What is the VA Amendment?
A VA amendment, also known as an escape clause, is a type of contingency clause designed to protect you if an appraiser assigns a value to the property that is less than the asking price. For example, if you offer to purchase a home for $300,000 but the appraiser determines its value to be $280,000, a VA amendment gives you the right to walk away from the transaction without losing your deposit. It also lets you make a larger down payment to make up the difference in the appraisal, if you can afford it.
Step 5. Get a VA Home Evaluation and Inspection
A VA-certified appraiser will determine the value of your home. The appraiser will also help evaluate whether the property meets VA property condition requirements, or minimum property requirements, and VA home appraisal guidelines.
This is also the stage where you may request a home inspection, if agreed to in your purchase and sale contract. Although a home inspection is not required for a VA loan, it is generally a good idea not to skip this step. Once you understand the property better, and if the seller doesn’t agree to make certain repairs before closing, you can walk away from the deal.
During the inspection, the home inspector will ensure that the home meets minimum property requirements. Items on this list include:
- Space requirements
- Access to and infringement of property
- danger
- Utilities
- Pool
- House structure
- Signs of deterioration
- Proximity to the airport
Step 6. Complete the mortgage underwriting process
The bank or lender underwriter will require additional documents to assess your loan eligibility and ensure that your loan is “approved for closing.” Documents that you will need to submit include:
- Proof of income
- Bank Statements
- Tax returns
- Identity Verification
- Government-issued photo ID
- Certificate of Eligibility
Step 7. Sign the contract for your new home
The closing step involves signing a document stating that you understand and agree to the terms of the loan. Prior to your scheduled loan closing, you will receive a document called a Closing Disclosure, in which you will find a breakdown of your final VA closing costs.
Common costs include a funding fee, which can range from 1.5 percent to 3.3 percent of the loan amount. Typically, the higher the down payment on a VA loan, the lower the fee. There are exceptions: Surviving spouses and veterans with service-connected disabilities don’t have to pay a funding fee.
You can also make a final inspection of the property a day or two before signing. Once you have signed all the closing documents, including the purchase agreement, you will receive the keys to your new home.
After closing, the VA will return a Certificate of Eligibility with a note indicating that you have used (in whole or in part) your VA mortgage eligibility. Eligible borrowers can use their eligibility multiple times to obtain a loan for the new home they plan to live in.
