Now that you have determined that you are eligible (if you are unsure, please check your VA loan eligibility), you can start the loan application process. There are six important steps to this process: finding a VA approved lender, pre-qualifying for a loan, selecting your home, writing the purchase agreement, having the property appraised by the VA, and finalizing the loan.
To get a VA loan, it is important to note that the law requires that:
- The applicant must be an eligible veteran who has the right available.
- The loan must be for a qualifying purpose.
- The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after the loan closes.
- The veteran must present a satisfactory credit risk.
- The income of the veteran and his or her spouse, if any, must be shown to be stable and sufficient to meet mortgage payments, cover the costs of owning a home, attend to other obligations and expenses, and have enough money to support the family.
An experienced mortgage lender will be able to discuss specific income and other eligibility requirements.
Find a VA Approved Lender
Before you begin the application process, it’s a good idea to get a copy of your credit report. This can be obtained from one of the three major credit bureaus: Experian, Equifax, and TransUnion. Once you have obtained your credit report, the next step is to find a VA approved lender. A lender can report any credit problem you may have and provide you with a loan estimate. Compare the prices. Compare the closing costs of different lenders (in addition to the price of the property) incurred by buyers and sellers when transferring ownership of a property (also called settlement costs) and other costs. Military.com makes it easy to find VA approved lenders – just use our Quick form, and be matched with a maximum of three lenders.
Pre-qualification for your loan
Prequalifying for a loan is the best way to determine your borrowing power. Prequalification involves informing your lender of your income and assets. Based on this information, you can find out if you are eligible for a particular loan. Note that prequalification only gives an estimate of the amount of mortgage payments you can afford, based on the information you provide. Although prequalification is not a requirement, it is highly recommended. Without prior pre-qualification, you might find yourself searching for homes that you couldn’t necessarily afford.
Once you are pre-qualified, you will have a clear idea of how much income you will need to qualify. You will also know what range of house prices you can handle, which is important for the next step.
Selecting your home
If you are pre-qualified for your VA home loan, you will have a good idea of the homes you can afford. You can now begin the process of selecting your new home. Finding accommodation can be done in several ways:
- In line: There are many web pages dedicated to listing homes for sale. These pages are often helpful in finding homes that are out of your travel range and often include lots of photos and detailed information.
- Use a real estate agent: The yellow pages are a great way to find local agents. Many people hire real estate agents to go through the paperwork involved in buying a new home.
- Newspapers and other guides: Classifieds, agency listings, and real estate guides are a proven way to find home listings on the market.
Drafting of the purchase contract
Also referred to as the “deed of sale” or “purchase contract” contract, this document represents the finalized terms and conditions under which the transfer of real estate will take place. A purchase contract is basically an agreement between buyer and seller to purchase an agreed property on agreed terms, whatever they may be. The purchase contract will deal with, among other things: restrictions and easements, privileges on the property, inspections, previous leases, disclosures, preparation of documents for closing and maintenance of the property until the fencing.
Because the loan amount cannot exceed the VA’s estimate of the property’s value, in order to finalize the loan, you must request an appraisal by the Veterans Administration. While anyone (buyer, seller, real estate staff, or lender) can request a VA appraisal, it normally comes from the lender via the Internet using TAS (The Appraisal System).
It is important to recognize that although the VA appraisal estimates the value of the property, it is not an inspection and does not guarantee that the home is free from defects. Homebuyers should carefully inspect the property themselves or hire a reputable inspection company to help them. VA guarantees the loan, not the condition of the property.
Finalize the loan
If the established value is acceptable to all parties and the lender determines that you qualify on the basis of credit and income, the loan can be approved. Most lenders are allowed to make this decision.
You (and your spouse) attend the loan closing and sign the note, mortgage, and other related documents. The lender or closing lawyer will explain the terms and requirements of the loan as well as where and how to make the monthly payments. When the loan is reported to the VA, the certificate of eligibility is annotated to reflect the use of the entitlement and returned to the applicant. The loan closing procedure may vary in some states. Closing costs can be substantial, even with a VA loan, so check with your real estate agent before closing and avoid any unpleasant surprises.
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