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VA loans are a specialized mortgage option. They feature some big financial benefits other loan programs can’t match.
But the process of buying a home with one isn’t considerably different from any other loan.
Here’s a brief look at the VA loan process to help both veteran homebuyers and their real estate agents better navigate how to cross the finish line.
Pre-qualification & pre-approval
This is a critical first step. VA loan pre-qualification and pre-approval requirements can vary by lender. VA lenders are often looking for a FICO score of at least 620, a benchmark lower than what you’ll typically need for conventional financing.
Getting pre-qualified and pre-approved gives borrowers a clear sense of whether they’re ready and what they can afford. It also shows home sellers and listing agents that you’re a strong home-buying candidate.
A pre-approval letter in hand puts a veteran in a prime position to start the house hunt.
Getting under contract
Signing a contract to purchase a home comes next. This is a step where real estate agents who know VA loans can make a big difference for military buyers.
Buyers can use this program to purchase single-family homes, condos, multiunit properties, and more. But the VA also wants veterans getting “move-in ready” homes that meet some basic health and safety conditions. Some fixer-uppers can be challenging to make work for VA loans.
The VA allows sellers to pay all of a buyer’s mortgage-related closing costs and up to 4% of the purchase price in concessions, which can include things like prepaid taxes and homeowners insurance and even paying off collections.
VA-savvy agents can help veterans draft a competitive offer that maximizes the program’s benefits and your bottom line.
VA appraisal
Once a veteran is under contract, their lending team will order an appraisal, which is conducted by an independent VA appraiser. The VA appraisal process has two parts: determining the home’s value and whether it meets property condition requirements.
Lenders will typically need at least one good recent comparable home sale to support the property’s value. Contrary to common misconception, VA buyers are allowed to pay for repairs in order to satisfy the property requirements. It’s often more a question of whether that makes good financial sense.
Underwriting
Like with any other mortgage, a lender’s underwriting team will review your loan file for completeness. You’ll need to meet guidelines set by both the VA and the lenders.
Borrowers can help themselves by answering questions and supplying paperwork as swiftly as possible. It’s not uncommon for underwriters to ask for additional documentation regarding finances, assets, and related issues.
Closing
It’s time to celebrate! Most VA loans close in 30 to 45 days, which is the same as conventional financing. You’ll sign a stack of paperwork and get the keys to your new home.
Want to learn more? Check out our Veterans Guide to Homeownership and get started on your home-buying journey.
This article was written by Chris Birk, director of education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”
NMLS 1907 (www.nmlsconsumeraccess.org) Veterans United Home Loans is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency; does not reflect DOD endorsements. Equal Opportunity Lender. 1400 Veterans United Drive Columbia MO, 65203.