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The VA Loan Process

Getting a VA loan isn't significantly different from getting any other type of mortgage. For homebuyers, the VA loan has five basic steps: preapproval, house hunting, getting under contract, underwriting and closing.

This process typically results in a stronger financial future, using arguably the most powerful mortgage product on the market.

Here we detail the step-by-step process of getting a VA loan and how Veterans can get the most out of their VA loan benefit.

Step 1: VA Loan Preapproval

Getting preapproved for a VA loan is a foundational first step. Preapproval is the initial green light from your mortgage lender and gives you a clear sense of your purchasing power.

Preapproval also adds weight to any offer you place on a home. In today's real estate environment, home sellers expect to see offers from preapproved buyers. Some sellers might not even consider your offer without a copy of your preapproval letter.

During preapproval, your lender will look at your credit, finances, employment situation, service history and more. Lenders validate your service history with the Certificate of Eligibility (COE). You don't need a COE to start the process since lenders can typically access this document on your behalf with only a date of birth and social security number.

Additional documents typically include W-2s, recent pay stubs and bank statements. This step of the VA loan process can take minutes to hours, depending on your lender's documentation requirements.

Document requests can differ depending on the nature of your income, your military service history and more.

Documents you may need to provide during VA Loan preapproval include:

  • A copy of your driver's license or other government identification
  • A copy of your DD-214 or Reserve/Guard points statements
  • A statement of service for active duty borrowers
  • Recent pay stubs and W-2s for the last two years
  • Recent bank statements
  • Disability award letters

Talk with your loan officer if you have questions about documentation needs. The faster you get this paperwork back to the lender, the quicker they can move to verify the information and finalize your loan preapproval.

Remember that a preapproval letter isn't a guarantee of financing, and this step typically comes with a host of conditions to reach the final stage of the VA loan process.

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Step 2: The House Hunt

With your preapproval letter in hand, you're ready to start the most exciting stage of the VA purchasing process – the house hunt.

Finding a real estate agent who truly knows VA loans is critical. These are more specialized home loan options, and some properties can be a better fit for VA loans than others. Plus, VA loans also offer big-time advantages when it comes to things like closing costs, and veteran-friendly agents can help buyers get the most from their benefits.

Veterans United works to connect buyers with VA-savvy agents through Veterans United Realty, our national network of agents who understand the needs of military buyers.

VA buyers can use their home loan benefit to purchase:

  • Existing single-family homes
  • New construction *
  • Condos
  • Manufactured and modular housing
  • Multiunit properties
* Veterans United does not currently make a traditional construction loan.

Like the other government-backed mortgage options, VA loans are for purchasing primary residences you intend to live in full-time. Veterans can look to buy a multi-unit property (up to a four-plex) as long as they plan to live in one of the units.

Homes generally need to be in good shape. The VA appraisal process includes a look at the home in light of some general property condition requirements, known as the Minimum Property Requirements (MPRs). MPRs are a high-level overview and not as in-depth as a home inspection. The VA doesn't require a home inspection, but home inspections are almost always a sound investment.

If the appraiser notes MPR issues, they may require fixing before closing the loan. VA buyers can ask sellers to pay for repairs and even cover the cost themselves if needed.

Purchasing a fixer-upper is possible with a VA loan, but it can present challenges for the VA appraisal process. Talk with a loan specialist in more detail if you're looking for that type of property.

Once you find a home you love, the next step is making an offer to buy it.

Step 3: Getting Under Contract

Your loan officer and a trusted real estate agent can help you craft a strong offer.

Your agent will look at recent comparable home sales in the area to help shape your starting point for a purchase price. Pricing and negotiation strategies can vary depending on the real estate market, the particular home and much more.

Veterans should discuss closing costs with their loan officer and agent before making an offer. VA loan closing costs can vary depending on a host of factors. Buyers can ask sellers to pay all their loan-related closing costs and up to 4 percent in concessions, which can cover escrow expenses and much more.

Most prospective VA buyers will present a contract with several contingencies that cover specific events leading up to the loan closing. Typical contingencies include the right to have a home inspection, handling repair requests, the number of days the buyer has to secure financing, the required earnest money deposit and more.

Every VA contract features added protection for the Veteran's earnest money regarding the VA appraisal. A special addendum ensures VA buyers get their earnest money back if the property's appraised value comes in low and the Veteran decides to back out of the deal.

It might take VA buyers a couple of rounds of negotiation to lock down a purchase agreement. Also, keep in mind some markets are tougher than others. You may make offers on multiple homes before finding something that works. Every buyer-seller situation is different.

Step 4: Appraisal and Underwriting

The VA loan process jump-starts once you're under contract. Your loan team sends your contract and documentation to loan processors and underwriters who set out to verify the loan and the home work for the borrower, lender and the VA.

At this stage, the lender will also order the VA appraisal. Homebuyers typically cover the appraisal cost up front, although it's possible to seek a reimbursement from the seller at closing.

The VA assigns an independent, third-party appraiser to assess the property's value and condition. Lenders have no control over the appraiser, their timeline for conducting the appraisal, or their assessment of the property.

The appraiser will look at recent comparable home sales when evaluating the home's fair market value. Buyers will need the home to appraise for at least what they've offered to pay for it. If an appraisal falls short, the buyer and seller will need to renegotiate the purchase price or end the transaction.

If the appraiser notes repairs are needed to meet the VA's Minimum Property Requirements, buyers can ask the seller to pay for those or even cover the costs themselves in some cases.

Your loan team will likely have questions and requests for additional information while the appraisal process unfolds. The faster you get back to your lender with answers and information, the smoother this stage tends to go. Talk with your loan team if you have any questions or need an additional explanation about an underwriting request.

After passing the appraisal and underwriting, you'll receive a "clear to close," which means you're ready to head to your closing day. Being "clear to close" is still not a guarantee of financing, but you're just about there.

Step 5: Your VA Loan Closing

VA buyers will receive a Closing Disclosure shortly before their scheduled loan closing. This document allows buyers to compare their final closing costs and loan information to estimates they received earlier in the process. Your loan officer typically reviews this document with you. Be sure to ask if you have any questions about your costs, fees, or anything else.

You may also have a final walkthrough of the property. A final walkthrough allows you to verify any repairs, request removal for items you didn't want to stay behind and more. Contact your real estate agent and lender if there are any problems as soon as possible.

On closing day, expect to sign a lot of paperwork and finally get the keys to your new home.

A good understanding of the VA loan process will help you get the most from your budget and this incredibly powerful benefit. Talk with a Veterans United loan specialist to kickstart your homebuying journey.