How To Get A VA Loan: Step-By-Step
VA loans are special government-backed loans that can help you buy a home with no money down at an affordable interest rate. Let’s take a look at the steps you’ll need to take in order to get a VA loan.
Check To See If You’re Eligible
First, determine if you can get a VA loan. You may qualify for a VA loan if you’re a military veteran, a current service member or a spouse who meets specific requirements. You can learn more about those requirements by visiting the Department of Veteran Affairs website and our Guide to VA Eligibility.
The property you want to purchase must also meet certain minimum property standards (MPS) set by the VA. These standards ensure that the home you buy is safe, structurally sound and free of pests. A VA appraiser will check your new home before you close on your loan to make sure it meets MPS. If not, you or the seller will need to make repairs before you get your loan.
You can only buy a primary residence with your VA loan. In other words, you must plan to live in your home full time. You can’t buy a vacation home or investment property with a VA loan.
Get Your VA Documents
Next, you’ll need to get documentation from the Department of Veterans Affairs once you know you qualify for a VA loan. A Certificate of Eligibility (COE) tells lenders that they can issue you a VA loan. You can learn more about COE requirements by service type on the VA website.
Get Your Certificate of Eligibility (COE)
You must apply for your COE with the Department of Veterans Affairs with relevant evidence that proves you meet VA loan qualifications. The specific forms you need to gather depend on your service or spousal qualifications.
Veterans need to submit DD Form 214. DD Form 214 is a certificate that verifies your military discharge. You can request your DD Form 214 online by using the eVetRecs filing system.
Active Duty Servicemembers
You’ll need a statement of service signed by your personnel officer, adjunct or unit commander if you’re an active duty servicemember. The statement of service must include your full legal name, Social Security number and birthdate. It must also document the date you entered the service, information on any breaks or discharges you took from service and the name of the commander providing the information. Ask your superior for a statement of service before you apply for your COE.
Current National Guard Or Reserve Member
Current National Guard or Reserve members also need a statement of service. The requirements for your statement are the same as they are for active service members.
Discharged Member Of The National Guard
Discharged members of the National Guard need to have NGB Form 22, Report of Separation and Record of Service for each period of National Guard service. You must also have NGB Form 23, Retirement Points Accounting and proof of character of service. National Guard units belong to individual states, so there is no central record archive. Contact the National Guard Adjutant General’s Office in the state where you served and request your NGB Form 22 and 23 in order to get your COE.
Discharged Member Of The Selected Reserve
You must have a copy of your annual Retirement Points Statement if you’re a discharged member of the Selected Reserve. You also need proof of honorable service and discharge.
Surviving spouses who do not get dependency benefits can get a COE as long as you have your spouse’s DD Form 214, your marriage license and your spouse’s death certificate. You also need to print and complete VA form 21P-534-ARE, available on the VA benefits website.
Surviving spouses who receive dependency benefits need to print and complete VA form 26-1817. You can download the form for free from the VA benefits website.
Rocket Mortgage® by Quicken Loans® can help you get your COE to make the loan process easier for you.
Apply For The VA Loan And Take Your Next Steps
Fill Out Your Mortgage Application
You can apply online with Rocket Mortgage by Quicken Loans. You’ll be able to see your mortgage options and understand whether a VA loan is right for you. After you apply, your lender will take a look at your most recent W-2s, bank statements and credit report. Once your lender finishes looking at your finances, you’ll get a preapproval letter.
A preapproval letter tells you how much of a loan you’ll qualify for. You can use your preapproval letter to start shopping for homes within your budget. Getting a preapproval also puts you at an advantage over other buyers because it shows sellers that you already have funding for your loan.
The VA doesn’t limit how much money you can borrow with a VA loan, but they do limit how much they’ll guarantee ($36,000). Your VA loan guarantee is the amount of money the VA will pay back if you default on your loan. Most lenders will guarantee at least up to the conventional loan limit, which is $484,350. Quicken Loans also offers jumbo VA loans up to $1.5 million.
Select A Lender That Offers VA Loans
Not every lender can issue VA loans. Quicken Loans is one of the country’s top VA lenders, and we work with the VA directly on your behalf. Quicken Loans even allows you to apply for your loan before you get your COE.
Compare banks, credit unions, and online lender requirements for VA loans and decide which service is right for you. When you find a lender you want to work with, apply for a preapproval.
Learn About Other VA Loan Requirements
Now, let’s talk about some other requirements you’ll need in order to get a VA loan.
Though you don’t need a down payment, lenders may have other requirements for applicants who put down less than 10%. For example, to get a VA loan from Quicken Loans, you need a credit score of at least 620. Your credit score is a three-digit number that expresses how consistent you are when you pay back debts and it also represents your credit history.
Remember that “no down payment” doesn’t mean “no cost to you.” When you close on a VA loan, you need to pay what’s called a VA loan funding fee. Funding fees can range from 1.25% – 3.3% of your loan amount. The funding fee amount depends on the type of loan and your military category, whether you’re a first-time or subsequent loan user and whether you have a down payment all ready to go.
Most lenders also require you to have at least a certain amount of “reserve funds” when you close. Reserve funds are excess cash you have in the bank that you’re not using for upfront fees. The amount of reserve funds you need to close on your loan depends on your lender. Usually, you must show that you have at least two months’ worth of mortgage payments in the bank after closing costs.
Debt-to-Income Ratio (DTI)
Lenders also look at your debt-to-income (DTI) ratio. Your DTI ratio is a percentage that tells lenders how much money you spend versus how much money you have coming into your bank account. You can calculate your DTI by adding up your monthly minimum debt payments and dividing that figure by your monthly pre-tax income.
There is no specific DTI requirement when you apply for a VA loan. Like credit scores, lenders set their own standards. You can have up to a 60% DTI and still get a fixed-rate VA loan with Quicken Loans.
Make An Offer On A House
You’ve found the home you want – congratulations! You can make an offer to the seller or the seller’s agent. If you have a real estate agent, he or she can help you decide how much to offer. Your real estate agent can also help you draft a binding offer letter. If you’re shopping without an agent, you can negotiate with the seller or the seller’s agent yourself. Make sure you submit information on all the conditions the home must meet in your offer letter. For example, you may want to include a condition that the home needs an inspection before you close on the loan.
Once you submit an offer, the seller has three options: They can accept the offer, give you a counteroffer or decline. Once you and the seller reach an agreement, it’s time to close on your loan and finalize the sale.
Before you head to the closing table, your lender will underwrite your application. Underwriting is the process of verifying your income, assets, debts and VA eligibility before you get your loan. Your mortgage lender will handle most of the underwriting process behind the scenes. However, they may contact you and ask for documents like your COE or bank statement. Keep a copy of your COE, your most recent bank statement and your last two tax returns on file to speed up the underwriting process.
One of the final steps in the loan application process is the appraisal. During an appraisal, a VA appraiser will look at your home and determine its value. The appraiser will also make sure that the home is safe to live in and that it meets VA guidelines. Appraisals are important because they assure the lender that they’re not loaning out too much money to you. Your mortgage company will order your appraisal, but it will be conducted by a third party. Appraisals usually cost between $250 – $600, and that amount is included in your closing costs. There are other fees involved in your closing costs, as well.
Once your appraisal clears, it’s time to close on your loan. Before your closing, your lender will give you a document called the “Closing Disclosure.” The Closing Disclosure includes a summary of the terms of your loan and what costs you must pay at closing. By law, your lender needs to give you at least three business days to read over it. Your lender will then schedule your closing.
Bring your ID, Closing Disclosure, down payment if you have one, VA funding fee and your other closing costs to your closing. Your lender will guide you through the closing process. Once you’ve paid your dues and signed on your loan, you’re officially a homeowner.
VA loans are a low-cost way for active and former service members as well as qualified military spouses to buy a home. Both you and your property need to meet VA lending standards before you can get a loan and have a Certificate of Eligibility (COE).
Lenders may also have their own income and credit standards that you must meet. Rocket Mortgage by Quicken Loans can help you get your documents. Once you find your VA-approved lender and make an offer on your home, an underwriter will look at your finances and VA eligibility. A VA appraiser will then take a look at your home to make sure it meets safety requirements before you close on your home.
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