How Do I Apply For A Va Mortgage Loan

Obtain A Certificate Of Eligibility

An experienced lender can help you obtain whats called a Certificate of Eligibility . The COE will prove that you meet initial eligibility standards for VA loan benefits. It will also let the lender know how much entitlement you can receive, which is the amount the Department of Veterans Affairs will guarantee on your VA loan. To get your COE, youll need to give your lender a bit of information about your military service. Usually, a COE can be acquired online instantly through a lenders portal or through the eBenefits portal on the va.gov website. Those servicemembers or surviving spouses whose COEs cannot be obtained online will have to get theirs by mail. A VA lender or the VA can help direct you to the right resource for your specific situation.

Lender Processes Application And Orders Va Appraisal

A signed purchase contract is the document youll need to finish your initial application. Once your lender has the contract, they will order the VA appraisal. Here again, not just any appraiser will do. Only a professional who is certified to perform appraisals to VA standards can evaluate the home being considered for VA financing. The VA appraiser will make sure the price youve agreed to pay for the home corresponds with the current value. Another very important part of the VA appraisal is to inspect the home to make sure it meets the VA minimum property requirements . However, the VA appraisal does not take the place of a home inspection, which focuses on code violations, defects and the condition of the property. While many borrowers have heard horror stories about the length of the VA appraisal process, the Department of Veterans Affairs gives the appraisers 10 days from order to completion barring extenuating circumstances. While youre waiting for appraisal documents, youll be busy submitting documents of your own to your VA-approved lender to show you have the ability to qualify for the loan. If the home passes appraisal for value and VA minimum property requirements, and its verified by the lender that you qualify for your loan, the underwriter will give his or her stamp of approval.

Best Va Mortgage Lenders

Best for VA mortgage experience overall

Best for ease of application

Best for traditional lending experience

Best for VA lending volume

Min. credit score

Veterans United offers VA loans for as little as 0% down.

View details

Good for: veterans, active-duty service members and eligible reservists looking for VA loans.

Pros

• Offers 24/7 customer service over the phone.

• Offers a free credit counseling service.

• Mortgage rates are on the low side, according to the latest federal data.

Cons

• Doesnt offer home equity loans or HELOCs.

• Veterans United has physical branch offices in only 17 states.

• Focus on VA loans, so may not be the strongest choice for those seeking other loan types.

Min. credit score

On VA loans, NASB offers down payments as low as 0%.

View details

Good for: active military members and veterans and first-time home buyers.

Pros

• Devotes much of its business to serving military families with VA loans.

• Offers a mortgage tailored to self-employed borrowers.

• Offers low rates and fees compared with other lenders, according to the latest federal data.

Cons

View details

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Best For Low Credit Scores Runner

New American Funding is our second pick for low credit score requirements for VA loans. While its 580 minimum credit score requirement is not unique on the list, it has one of the broadest selections of mortgage loans among similar lenders.

Notably, it offers what NAF refers to as an I CAN loan, which allows you to choose a custom fixed loan term between 8 and 30 years. It also offers a buydown mortgage option for VA loans, which allows borrowers to reduce the number of their mortgage payments for the first 1-3 years of their loan.

• No branches in Alaska or West Virginia
• Rates not disclosed unless you call or submit an online form requesting a callback
• Phone customer service hours may be too restrictive for some

Why we chose it:Fairway Independent Mortgages presence in 48 out of 50 U.S. states makes it our top pick for in-person mortgage loan servicing.

Fairway Independent Mortgage is notable for its many branches across all but 2 U.S. states , making it an ideal choice for individuals who prefer in-person service.

Fairway also offers a broad range of mortgage products which can be helpful for those who are unable to qualify for a VA loan. Among these loan products are specialized physician loans aimed at medical professionals still working through repaying their student loans.

Debt To Income Requirements

Your debt-to-income ratio is another important factor when it comes to VA loans. Again, the exact DTI for loan approval will depend on your lender and personal situation but, generally speaking, you can expect up to 45% to be the maximum acceptable DTI for a VA loan.

Can you qualify for a VA loan if you do not meet the debt to income requirements?

Every situation is unique and to offer the best answer, contact your mortgage banker. In some cases, your debt-to-income ratio can be adjusted by including any residual income you may have.

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Wondering How To Qualify For A Va Home Loan

To qualify for a VA loan, the most important document youll need is your VA COE. However, you must remember that your COE is just one part of your eligibility. Ultimately, who qualifies for a VA loan depends on a number of additional factors as well.

You must also satisfy your lenders financial requirements and make sure the property meets all the MPRs.

Check out our Best Rated VA home loan lenders.

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What Is The Va Guarantee

The US Department of Veterans Affairs guarantees a certain amount of the loan. This means that if a borrower defaults in any way on paying back the loan, the department will pay back a certain amount to the lender, depending upon your VA loan entitlement.

This VA guarantee makes it easy for lenders to provide mortgages at lower interest rates.

Access To Other Adaptation Grants

Disabled veterans may also qualify for a Temporary Residence Adaptation grant to add modifications to your property that make it easier to navigate if you live with a family member. Like SAH grants, you wont need to pay back your TRA grant, which makes them a powerful tool for veterans with mobility-related disabilities.

Property Tax Exemption

Property taxes fund things like libraries, fire departments, and local road and development projects. Disabled veterans property tax exemptions can lower the amount you must pay in property taxes.

These tax exemptions arent a federal program, and they vary by state and possibly area of residence, so check with your local VA office to learn the exemptions youre eligible for. Some states offer an exemption to all veterans, while other states limit this benefit to veterans who are currently receiving disability payments. Disabled veterans are 100% exempt from property taxes in some states.

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Unique Va Loan Requirements Include:

Military service history

The VA home loan benefit is only for military borrowers that have served enough time to meet eligibility requirements.

VA funding fee

One of the downsides to a VA loan is having to pay the VA funding fee cost of 0.5% to 3.6%. The funding fee is charged to offset the cost of the VA loan program to taxpayers and is typically rolled on top of the loan amount, even if you make no down payment. Disabled veterans are exempt from having to pay the funding fee.

How Does A Va Home Loan Work

The VA does not issue VA loans, but they do determine who qualifies for one and which lenders issue them. There are several types of VA loans, and they pose less of a risk to lenders because theyre backed by a government agency.

VA mortgages are considered non-conforming loans because they dont meet the guidelines of conventional lenders Fannie Mae and Freddie Mac. However, this allows more flexibility for clients to qualify because of their easier credit score requirements. They offer many advantages over conventional loans, including lower interest rates, more lenient borrowing requirements and no down payment due at closing. VA loans also never have monthly mortgage insurance.

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Va Loans Vs Conventional Loans

Borrowers with good credit and at least a 20% down payment often choose conventional loans to buy or refinance homes. However, there are conventional loan programs that require down payments as low as 3%, if you cant or simply dont want to use your VA loan eligibility. Heres how these two loan types stack up side by side:

Eligibility for various disability housing grant programs, including:

• Specially Adapted Housing or Special Home Adaptation grants, which offer up to $101,754 and $22,036, respectively, to help disabled veterans buy or improve a house they already own to make it more accessible.
• Temporary Residence Assistance grants, which provides up to $40,983 to veterans to make accessibility alterations to a home owned by a family member.
• Home Improvements and Structural Alterations grants, which provide up to $2,000 for veterans with non-service-connected disabilities and up to $6,800 for veterans with service-connected disabilities.

How Many Times Can You Get Va Loans

You can get VA loans as many times as you wish. Keep in mind that the rules and requirements may change each time you apply for a new VA home loan. In most instances you can only carry one VA mortgage at a time, so you would probably have to payoff your existing mortgage before qualifying for the next one.

Also, make sure you dont have any unpaid periods of active duty service when applying again. You also must wait at least two years to reapply if your initial application was denied or withdrawn.

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Who Qualifies For A Va Loan

For those who are eligible, VA loans are attractive because they dont usually require a down payment. They also have lower interest rates than many other types of mortgage loans you can get for similar terms. They dont have monthly mortgage insurance.

Although lenders set their own requirements for certain aspects of qualification, VA loans have more lenient credit requirements than many other mortgage programs. That means qualifying for one should be easier, even if you have a poor credit history or small down payment.

Not all who have served in the Armed Forces qualify for a VA loan. You must meet at least one of the following criteria to qualify:

• Youve served 181 days of active service during peacetime.

• Youve served 90 consecutive days of active service during wartime.

• Youve served more than 6 years of service with the National Guard or Reserves or 90 days under Title 32 with at least 30 of those days being consecutive.

• Youre the spouse of a service member who lost their life in the line of duty or as the result of a service-connected disability. You generally cannot have remarried, although there are exceptions, as well as other requirements for a spouse getting a VA loan.

Wartime or peacetime definitions depend on when you served. For more information, see the VAs eligibility guidelines.

Va Loans And Rental Properties

Though the US Department of Veterans Affairs does not provide loans for rental or investment properties, it does provide mortgages for multi-unit properties.

So, if you are planning to live in one unit and rent the others, you can use your VA homes to earn a rental income with up to four total units.

In addition to meeting the departments and lenders requirements, you must also take care of the occupancy requirements if this is the route you want to take.

Some lenders might expect you to prove that youll be living in the house for at least 12 months after the loan closing.

For multi-unit homes to qualify for VA loans, they must meet unique guidelines that differ from single-unit homes.

All units must have separate utility services or joint water, sewer, gas, and electricity lines. The house must also have individual shut-offs for all units.

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Servicemembers Veterans And National Guard And Reserve Members

Apply online

To get your Certificate of Eligibility online, please go to the eBenefits portal. If you already have login credentials, click the Login box, and if you need login credentials, please click the Register box and follow the directions on the screen. If you need any assistance please call the eBenefits Help Desk at 1-800-983-0937. Their hours are Monday-Friday, 8am to 8pm EST.

Apply through your lender

Most lenders have access to the Web LGY system. This Internet-based application can establish eligibility and issue an online COE in a matter of seconds. Not all cases can be processed through Web LGY – only those for which VA has sufficient data in our records. However, Veterans are encouraged to ask their lenders about this method of obtaining a certificate.

Apply by mail

Use VA Form 26-1880, Request for Certificate of Eligibility.

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Interest Rate Reduction Refinance Loan

Interest rate reduction refinance loans , also known as VA streamline refinance loans, help borrowers obtain a lower interest rate by refinancing an existing VA loan. This is a VA-loan-to-VA-loan process that allows homeowners with an existing VA loan to refinance a fixed-rate loan at a lower interest rate or convert an adjustable-rate mortgage into a fixed-rate mortgage.

What Happens After I Apply

You can start a VA loan application in just a few minutes. But the full loan process generally takes about 30-45 days on average.

After the initial application, your mortgage continues through the underwriting process. This is when your lender takes a closer look at your credit report and supporting documentation. It also evaluates the property to ensure your new home is a safe investment.

The underwriting process

As the home buyer, you can request a home inspection at this time. An inspection isnt required, but its highly recommended to uncover costly hidden problems.

In your purchase agreement, you can include a clause that states the sale is subject to a satisfactory home inspection. If the home inspection report reveals issues, you can ask the seller to fix these issues before proceeding with the mortgage loan.

A home appraisal is required by mortgage lenders. This involves a third-party appraiser visiting the property and estimating its value. As a general rule of thumb, you cant borrow more than a property is worth.

If the home appraises for less than the purchase price, youll have to pay the difference out-of-pocket or renegotiate the sales price with the seller.

The underwriting process also involves a title search to look for potential title issues.

Finally, the underwriter will review your income, assets, and debts before issuing a final approval and scheduling a closing date.

Final approval and closing

A sample of your closing costs include:

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