Veteran Home Loans

While the VA loan application process is similar to the application process for a conventional mortgage, there are some important differences. Below are the six basic steps involved in obtaining a VA loan:

1. Certificate of Eligibility: In order to prove that you qualify for a VA loan, you’ll need to secure a Certificate of Eligibility or COE. This basically provides proof to the lender of your military service based on your status. Most lenders can help you obtain a COE, but be sure to tell your lender you’ll need a COE early on in the loan application process.
2. Get Preapproved: This is a crucial step to complete early on when you are looking to buy a home. This helps you, your real estate agent, and your lender gets a better idea of how much home you can afford. Plus, when you find a house you like, the seller will usually take your offer more seriously if you’ve already been preapproved.
3. Find a House: This is the fun part! Find a home that is right for you and that meet’s the VA’s minimum property requirements. These guidelines help ensure that your new home is safe to live in and vary by region.
4. Make an Offer: Once you find a home that you like and that meets the VA’s minimum property requirements, it’s time to make an offer!
5. VA Appraisal and Underwriting: Your lender will have an underwriter assess your finances to make sure you qualify for a VA loan, and similarly the VA itself will also require an appraisal before approving your loan. The VA appraisal will involve verification that the home meets the VA’s minimum property requirements.
6. Closing: With the appraisal and underwriting out of the way, it’s time to close! Congratulations, you’re a homeowner!

The Department of Veterans Affairs will determine your eligibility for a VA loan depending on your status in the military, with most prospective homeowners fitting into one of the following categories:

1. Active Duty
2. Veteran
3. Military Reserves or National Guard
4. Military Spouse

Not everyone who served in the armed forces is automatically eligible for a VA loan. You must meet one of the following criteria to qualify:

1. Served 181 days of active service during peacetime
2. Served 90 consecutive days of active service during wartime
3. Served more than six years with the National Guard or Reserves or 90 days under Title 32 with at least 30 of those days being consecutive
4. You are the spouse of a service member who lost their life in the line of duty or as the result of a service-connected disability.

If you have questions about your eligibility or what category you fall into, you can view the VA loan program eligibility requirements in full here.

Lenders set their own requirements for VA loan qualification as well, but generally, VA loans have more flexible credit requirements than conventional mortgages.

VA loans have a range of benefits when compared to conventional mortgages for eligible veterans, active duty service members, and eligible spouses:

1. Lower Rates: VA loans are backed by the government and carry a lower risk for lenders so they generally offer lower interest rates than conventional loans, especially for borrowers with lower credit.
2. No Down Payment: VA Loans usually don’t require a down payment which allows borrowers to come to the table with less money up front – meaning more money stays in your pockets.
3. 100% Loan-to-Value: This simply means that with a VA loan, you don’t need equity to refinance to a lower rate or take cash out in most instances.
4. No PMI: Private mortgage insurance, or PMI, is another cost associated with conventional mortgages that buyers generally have to pay for when they put down less than 20%. However, with VA loans you don’t need PMI which can save you up to 2% of your loan amount until you reach 20% equity in your home.
5. Flexible Borrowing Requirements: Have a lower credit score and are worried about qualifying for a loan? With VA loans you can qualify for a higher debt-to-income (DTI).

There are some restrictions on how VA loans can be used and on what types of properties they can be used to purchase:

1. Primary Residence: VA loans must be used to purchase your primary residence and will not cover investment properties or vacation homes.
2. VA Qualifications: As discussed above, the VA will send an appraiser to assess the home you intend to purchase to ensure it meets the VA’s minimum property requirements.

In addition to only being available to the military, veterans, and their spouses, other differences include that VA loans allow homebuyers to make a lower down payment, avoid paying private mortgage insurance, and get a lower interest rate than a conventional mortgage.