A Guide to Get a VA Home Loan

Eligible veterans, active-duty military personnel, and surviving spouses can take advantage of VA loans to finance their home purchases. These mortgages, backed by the U.S. Department of Veterans Affairs and offered through lenders across the country, often feature appealing fixed-rate terms with no down payment required. Additionally, VA loans typically have more lenient credit score criteria.

Here’s your guide to navigating the VA loan process.

Step 1: Determine if you are eligible for a VA loan

Step 1: Confirm Your Eligibility for a VA Loan

Before you begin exploring VA loan options, verify whether you meet the eligibility criteria, which include:

• Length of Service: For active-duty members, you must have served continuously for at least 90 days. For veterans, National Guard, and Reserve members, eligibility depends on your service period, which you can check on the VA website.
• Credit Score: While the VA does not impose a minimum credit score requirement, individual lenders do. If your credit score is below 600, you might need to improve it or seek lenders willing to work with those who have “fair” credit.
• Debt-to-Income (DTI) Ratio: You need to show you can manage your monthly debts, with a typical acceptable DTI ratio of no more than 41 percent, though some lenders may be flexible.

You will also need a Certificate of Eligibility (COE) to prove you meet the basic requirements for a VA loan. Obtain your COE through the eBenefits portal on the VA.gov website or by contacting the VA directly. Some lenders can assist with this process as well.

To get your COE, you may need to provide:

• A driver’s license or other government-issued ID
• Recent financial documents, such as W-2s, pay stubs, and bank statements
• For active-duty members, a signed statement of service
• For veterans, discharge or separation papers (DD214)
• For surviving spouses, a marriage certificate or license

Additionally, VA loans require that the home be used as a primary residence and occupied within 60 days after closing, although the VA may extend this period up to 12 months based on individual circumstances.

Step 2: Shop around for a VA-approved lender

After confirming your eligibility, the next step is to find a mortgage lender approved for VA loans. You can reach out to a local Veterans Service Organization (VSO) representative for a list of VA-approved lenders in your area.

Once you connect with a loan officer, they will guide you on the necessary documents and the loan amount you might qualify for. Since interest rates, closing costs, and discount points can vary, it’s wise to compare offers from different lenders.

Step 3. Get preapproved for a VA loan

Before applying for a VA home loan, start by getting preapproved. Preapproval demonstrates to sellers that you are serious about buying and that lenders consider you creditworthy. It provides an estimate of how much you could borrow, though it’s not a guarantee of the loan—final approval requires a specific property appraisal and potentially additional documentation.

To begin the preapproval process, contact a VA-approved lender. You’ll need to complete an application and provide financial documents, such as bank statements and past tax returns. The lender will perform a hard credit check to assess your creditworthiness. Based on this information, they will determine the amount you can borrow and the interest rate.

Step 4. Find your home

With your preapproval in hand, you can start house hunting. Partner with a real estate agent who has experience with VA loans and ideally specializes in working with military members. They can help you navigate the home-buying process and maximize your VA benefits.

Your agent will assist in crafting a competitive offer and negotiating with sellers. Once your offer is accepted, you’ll sign a purchase and sale agreement.

Be mindful of contingencies, such as the timeframe for securing financing, the amount of earnest money required, and the right to a home inspection. Additionally, you might negotiate for the seller to cover some or all of the VA closing costs.

Step 5. Go through a VA home appraisal and inspection

A VA-approved appraiser will evaluate the home’s value and ensure it meets the VA’s Minimum Property Requirements and appraisal guidelines. This assessment is crucial for confirming the property’s worth and condition.

If your purchase and sale agreement includes a home inspection, you’ll arrange for this next. While a home inspection is not required for VA loans, it’s highly recommended. An inspection helps you understand the property’s condition and negotiate necessary repairs with the seller before finalizing the sale.

During the inspection, the inspector will check for issues related to:

• Space requirements
• Property access and potential encroachments
• Hazards and safety concerns
• Utility systems
• Swimming pools
• Structural integrity
• Signs of deterioration
• Proximity to airports

Step 6. Complete the mortgage underwriting process

Your lender’s underwriters will review additional documentation to finalize your loan approval and ensure you’re ready to close. Documents typically required include:

• Proof of income
• Bank statements
• Tax returns
• Identity verification
• Government-issued photo ID
• Certificate of Eligibility (COE)

Step 7. Close on your new home

During closing, you’ll sign documents that outline and confirm your loan terms. Prior to this, you’ll receive a closing disclosure detailing the final VA closing costs.

Typical costs include a funding fee, which ranges from 1.5% to 3.3% of the loan amount. This fee usually decreases with a higher down payment. Notably, surviving spouses and veterans with service-connected disabilities are exempt from this fee.

A final walkthrough of the property is often scheduled a day or so before closing. Once you sign all necessary documents, including the purchase agreement, you’ll receive the keys to your new home.

After closing, the VA will return your Certificate of Eligibility with a note indicating that you have used part or all of your VA mortgage loan entitlement. Eligible borrowers can use their entitlement more than once to purchase a new home they plan to occupy.