VA Home Loan Application Guide for Eligible Veterans

As a veteran, you've earned the right to a VA home loan, but navigating the application process can be overwhelming. To start, you'll need to obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs, which can be done online or through the mail.

VA home loans offer more favorable terms than traditional loans, with lower interest rates and no down payment requirement. In fact, the VA guarantees up to 25% of the loan amount, making it easier to qualify for a mortgage. This means you can purchase a home with no down payment at all.

To be eligible for a VA home loan, you must have served at least 90 days of active duty during wartime or 181 days during peacetime. You can also qualify if you're a surviving spouse of a veteran who died in service or as a result of a service-connected disability.

To be eligible for a VA home loan, you'll need to meet certain requirements. You must have served in the armed forces, with specific service time requirements varying depending on whether you were on active duty or a member of the National Guard.

Here's an interesting read: Va Loan for Manufactured Housing Requirements

Here are the service time requirements:

You'll also need to meet financial requirements, including having enough income to pay for your mortgage and related costs, and having sufficient residual income beyond the cost of your mortgage.

You're probably wondering if you're eligible for a VA loan. Well, the good news is that if you've served in any active or reserve units of any military branch or National Guard branch, you're almost certainly eligible. Those who served active duty qualify after six months in the service.

To be more specific, here are the eligibility requirements:

Spouses of military personnel who died on active duty or died from a service-connected disability or of a service member who is missing in action or a prisoner of war also qualify, as long as they haven't remarried before reaching age 57.

The borrowing limits for a loan can vary depending on the location. In 2018, the limit was $453,100 for most parts of the U.S.

For example, in high-cost areas like San Francisco and New York, the limit can be as much as $679,650.

Here's an interesting read: Va Loan Amount Limit

To apply for a VA home loan, you can start by getting pre-qualified online, which can take as little as 15 minutes. This step will give you an idea of whether you're likely to get approved for the loan or if there are things you need to do first.

During the pre-qualification process, a lender will run your credit, assess your income, and check your assets. They'll also ask about your down payment and other savings.

You can get a VA loan with 0% down, which is a big difference from conventional loans. The lender will also review your credit history, credit score, and income before approving you for a specific loan amount.

Here's a breakdown of what to expect during the pre-qualification process:

So you're looking to apply for a VA loan, but you're not sure which type is right for you. There are several options available, each with its own unique benefits.

One of the main advantages of VA loans is that banks and mortgage companies can offer better terms because the VA guarantees a portion of the loan.

You can choose from a variety of loan types, including Purchase Loans, which offer competitive interest rates and don't require a down payment or private mortgage insurance.

Cash Out Refinance Loans allow you to take cash out of your home equity for a wide range of needs.

Interest Rate Reduction Refinance Loan, also known as the Streamline Refinance Loan, helps borrowers refinance an existing VA loan to get a lower interest rate.

Here are some of the main types of VA loans:

Native American veterans may also be eligible for the Native American Direct Loan Program, which offers special financing options.

Adapted Housing Grants are available to help veterans with a permanent and total service-connected disability buy, build, or modify a home to accommodate their disability.

Worth a look: Current Veterans United Mortgage Rates

Applying for a VA loan can seem daunting, but it's a straightforward process. You can get a VA loan from traditional lenders, like banks and credit unions.

The first step is to get pre-qualified for a VA loan online. This involves a credit check, income assessment, and asset check. You'll need to provide information about your income, assets, and debts. You can get pre-qualified in as little as 15 minutes.

During the pre-qualification process, the lender will also ask about your credit history and credit score. If your score isn't quite where it needs to be, the lender might make recommendations to help you improve it.

Next, you'll need to gather the necessary documents to apply for a VA loan. These typically include tax returns and W-2s from the previous two years, bank account statements, recent pay stubs, rental history, employment verification letter, and a copy of your driver's license.

For more insights, see: Usda Mortgage Credit Requirements

You'll also need a Certificate of Eligibility (COE) confirming you meet the requirements for a VA loan. This certificate provides information about your VA entitlement, which determines how much you're eligible to borrow.

Here's a list of the typical documents required for a mortgage loan application:

After submitting your application and documents, the lender will review your credit history, credit score, and income before approving you for a specific loan amount. If everything checks out, you can move forward with the underwriting process.

As you navigate the VA home loan application process, it's essential to understand the unique benefits and incentives available to you.

Most VA borrowers won't be required to make a down payment, but it can make sense to put some money down to reduce your VA funding fee and end up with a smaller loan amount.

VA loans don't require mortgage insurance, which can save you money on your monthly payments.

VA lenders can only charge 1% of your loan to cover their fees, making VA loan closing costs more affordable than other loan programs.

Veterans with qualifying disabilities get some extra perks when they use their VA loan benefit, including a VA funding fee exemption and property tax exemptions.

Here are some additional benefits for veterans with qualifying disabilities:

You can only get a VA mortgage from lenders approved by the Department of Veterans Affairs to issue these loans. Many banks, credit unions, mortgage companies, and online lenders offer VA loans.

The best VA lenders offer competitive rates and excellent customer service. A 2017 NerdWallet study gave high marks to Navy Federal Credit Union, Veterans United, Quicken, Bank of America, Citibank, and Fairway.

The big advantage veterans have is they can get into a program that makes it easier to get into a home that will make them happy. After spending so much time in tents and foxholes, they deserve it.

Check this out: Veterans United Home Loans

To find the best lender for you, compare rates and choose a lender. You can use the Loan Estimates you receive from each one to compare loan terms, mortgage rates, and fees.

Here are some top VA lenders to consider:

The VA home loan program has some unique closing costs and fees that you should be aware of. The VA funding fee is a one-time fee that helps offset the cost of the VA loan program to taxpayers.

It costs 1.25% to 3.30% of the loan amount, and is typically rolled into the total loan amount, even if you make no down payment. Disabled veterans are exempt from having to pay the funding fee.

A VA home appraisal is usually more expensive than other home appraisals, costing $500 to $1,200. Only VA-approved appraisers can complete one.

The funding fee varies depending on the down payment and type of veteran. For instance, a borrower getting his/her first VA loan and making no down payment would pay a 2.15% fee on the amount of loan.

Intriguing read: Nhsc Loan Repayment Program Application

The fee is 1.25% if the borrower makes a down payment of 10% or more. Reservists and National Guard members usually pay about one-quarter of a percentage point more than active-duty personnel.

If you’re using the VA loan program for a second time and have no down payment, the fee is 3.3% of the total loan amount.

Expand your knowledge: Loan Application Fee