Find out if you qualify and how to get started with VA home loans
Welcome to our definitive guide on the VA loan program requirements. If you’re a veteran, active-duty service member, or surviving spouse looking to buy a home or refinance, VA loans could offer you the best deal, but you need to know the ins and outs of VA loan eligibility, benefits, and the application process to make an informed decision.
In this article, we’ll take a deep dive into VA loans and explore the following topics in detail:
Table of Contents:
Section |
Subsection |
Introduction |
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What are VA loans? |
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Who is eligible for VA loans? |
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What are the benefits of VA loans? |
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How do VA loans work? |
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What are the VA loan program requirements? |
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How to apply for VA home loans? |
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How long does it take to get a VA loan? |
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How to find the best VA loan rates? |
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How to refinance with a VA loan? |
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How to use your VA benefits more than once? |
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What are the VA loan closing costs? |
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VA loan FAQs |
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Conclusion |
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Why choose VA home loans? |
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How to get started with VA home loans? |
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VA loans vs. conventional loans |
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VA loan myths debunked |
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VA loan resources and links |
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Disclaimer |
If you want to skip ahead to a specific section, feel free to use the table of contents above. Otherwise, let’s start with the basics.
What are VA loans? 🏠
VA loans are mortgages that are guaranteed by the U.S. Department of Veterans Affairs (VA) and offered by private lenders, such as banks and credit unions, to eligible veterans, active-duty service members, National Guard members and reservists, and surviving spouses. The VA loan program aims to help veterans achieve homeownership by providing them with more favorable terms and lower costs than conventional mortgages.
In other words, if you qualify for a VA loan, you could potentially get a home loan with no down payment, no mortgage insurance, and lower interest rates than you’d find with other loan types. The VA also provides counseling and assistance to help veterans avoid foreclosure and stay in their homes.
Who is eligible for VA loans? 🤝
To be eligible for VA loans, you must meet the following basic requirements:
Active-duty service members:
If you’re currently serving in the military, you could be eligible for VA loans after 90 continuous days of service during wartime or 181 days of service during peacetime, or you may be eligible as a National Guard or reserve member after six years of service or more. If you were discharged due to a service-connected disability before meeting the minimum service requirements, you may still qualify.
Veterans:
If you served at least 90 days of active duty during wartime or 181 days of active duty during peacetime, or if you completed your full term of service (usually two years or more), you could be eligible for VA loans. If you were discharged early due to a service-connected disability, you may be eligible with fewer service days.
Surviving spouses:
If you’re the surviving spouse of a service member who died on active duty or as a result of a service-connected disability, or if you’re the surviving spouse of a veteran who died due to a service-connected disability or who was rated 100% disabled at the time of death, you may be eligible for VA loans.
Note that even if you meet these minimum requirements, you’ll have to obtain a Certificate of Eligibility (COE) from the VA to prove your eligibility before you can apply for a VA loan. The COE will show how much entitlement you have, which is the amount the VA will guarantee for your loan, and may require additional documentation depending on your circumstances.
What are the benefits of VA loans? 💰
VA loans offer several advantages over other types of home loans, including:
No down payments:
One of the biggest benefits of VA loans is that you can finance 100% of the purchase price of a home, meaning you won’t have to make a down payment. This can help you save thousands of dollars upfront and avoid having to pay private mortgage insurance (PMI) that other loan types may require if you put down less than 20%.
No mortgage insurance:
VA loans also don’t require mortgage insurance, which is an insurance policy that protects the lender if you default on your loan. This can save you hundreds of dollars every month in mortgage payments, depending on the size of your loan and the cost of the mortgage insurance.
Competitive interest rates:
VA loans usually come with lower interest rates than conventional loans, which can help you save money over the life of your loan. Plus, VA loans have a cap on how much lenders can charge in closing costs, meaning you’ll have more predictable and manageable costs.
Easier credit and income requirements:
VA loans have more flexible credit and income requirements than other loan types, meaning you may be able to qualify even if you have a lower credit score, high debt-to-income ratio, or other financial challenges. The VA also takes into account your regular military pay and allowances, which can boost your income and help you qualify for a higher loan amount.
How do VA loans work? 🤔
VA loans work similarly to other types of home loans, but with some key differences. Here’s a step-by-step guide to how VA loans work:
Step 1: Find a lender
The first step in getting a VA loan is to find a lender that participates in the VA loan program. You can search for VA-approved lenders online, talk to your real estate agent, or ask for referrals from friends and family members who have used VA loans in the past.
Step 2: Obtain a COE
Once you’ve found a lender and provided your basic information, such as your name, Social Security number, and service history, the lender will help you get a COE from the VA. The COE shows that you’re eligible for VA loans and how much entitlement you have. You may be able to get a COE online through the VA’s eBenefits portal, or your lender may be able to help you obtain it through their own system.
Step 3: Get pre-approved
After you’ve obtained your COE, your lender will usually ask you to fill out a loan application and provide supporting documents, such as your income and employment history, credit report, and bank statements. Based on this information, your lender will determine how much you can borrow and provide you with a pre-approval letter that you can use to shop for homes within your budget.
Step 4: Find a home
With your pre-approval in hand, you can start looking for homes that meet your needs and budget. Keep in mind that VA loans have some property requirements, such as adequate living space, safe access, and no major health or safety hazards, so you’ll want to work with a real estate agent who understands VA loans and can help you find the right home.
Step 5: Get an appraisal
Once you’ve found a home and made an offer, your lender will order an appraisal to determine the fair market value of the property. The VA requires that all homes financed with VA loans meet certain minimum property requirements and be appraised by a VA-approved appraiser.
Step 6: Close on the loan
If the appraisal comes back satisfactory and you and the seller agree on the terms of the sale, you’ll move on to the closing process. At closing, you’ll sign all the necessary paperwork, pay any closing costs or fees, and get the keys to your new home. Your lender will send the loan proceeds to the seller, and you’ll start making your mortgage payments as agreed.
What are the VA loan program requirements? 📑
VA loans have specific eligibility and property requirements that you’ll need to meet to qualify for the program. Here are the most important VA loan program requirements to keep in mind:
Eligibility:
To be eligible for VA loans, you must meet these requirements:
- You must have served at least 90 days of active duty during wartime or 181 days of active duty during peacetime, or completed your full term of service (usually two years or more), or be a National Guard or reserve member who has served for six years or more.
- You must have been discharged under conditions other than dishonorable.
- You must obtain a COE from the VA to prove your eligibility.
If you’re a surviving spouse, you may be eligible if:
- You’re the surviving spouse of a veteran who died from a service-connected disability or who was rated 100% disabled at the time of death.
- You’re the surviving spouse of a service member who died on active duty or as a result of a service-connected disability.
- You obtain a COE from the VA to prove your eligibility.
Property:
To be eligible for VA loans, the property you’re buying or refinancing must meet these requirements:
- The property must be your primary residence.
- The property must be move-in ready and meet the VA’s minimum property requirements (MPRs), such as adequate living space, safe access, and no major health or safety hazards.
- The property must be located in an eligible VA loan area and be appraised by a VA-approved appraiser.
Loan:
To be eligible for VA loans, the loan you’re applying for must meet these requirements:
- The loan must be for your primary residence, not an investment or vacation home.
- The loan amount must not exceed the VA’s maximum loan limits, which vary by county and are based on the median home price in your area.
- The loan must be structured according to the VA’s guidelines, which provide for low interest rates, no down payment, and no mortgage insurance.
How to apply for VA home loans? 👨💼
Applying for VA loans is a straightforward process that you can do online, by phone, or in person with a VA-approved lender. Here are the steps to apply for VA home loans:
Step 1: Determine your eligibility
Check whether you qualify for VA loans and how much entitlement you have by getting a Certificate of Eligibility (COE) from the VA. You can apply for a COE online through the VA’s eBenefits portal, or your lender can help you obtain it.
Step 2: Find a VA-approved lender
Look for a lender that participates in the VA loan program and has experience with VA loans. You can search for VA lenders online, ask for referrals from friends and family members, or work with a real estate agent who can recommend trusted lenders in your area.
Step 3: Get pre-approved
Fill out a loan application and provide supporting documents to your lender, such as your income and employment history, credit report, and bank statements. Based on this information, your lender will determine how much you can borrow and provide you with a pre-approval letter that you can use to shop for homes within your budget.
Step 4: Find a home
Work with a real estate agent who understands VA loans and can help you find a home that meets your needs and budget. Keep in mind the VA’s minimum property requirements and work with your agent and lender to make sure the home you’re interested in is eligible for VA loans.
Step 5: Get an appraisal
Your lender will order an appraisal of the property to determine its fair market value and ensure it meets the VA’s minimum property requirements. The VA-approved appraiser will provide a report that includes the value of the property, any repairs or improvements needed, and any hazards or defects that could affect your safety or health.
Step 6: Close on the loan
If the appraisal comes back satisfactory and you and the seller agree on the terms of the sale, you’ll move on to the closing process. At closing, you’ll sign all the necessary paperwork, pay any closing costs or fees, and get the keys to your new home. Your lender will send the loan proceeds to the seller, and you’ll start making your mortgage payments as agreed.
How long does it take to get a VA loan? 🕒
The time it takes to get a VA loan can vary depending on several factors, such as your lender’s processing time, the availability of appraisal and inspection services in your area, and the complexity of your application. However, in general, the VA loan process takes about 30 to 45 days on average.
Keep in mind that some steps in the process, such as obtaining a Certificate of Eligibility (COE) from the VA and getting an appraisal of the property, can take longer depending on your circumstances. You can speed up the process by working with a VA-approved lender who has experience with VA loans and can guide you through the process efficiently.
How to find the best VA loan rates? 📈
The VA sets a cap on how much lenders can charge in interest rates and closing costs for VA loans, but the actual rates you’ll get may depend on several factors, such as your credit score, income, loan amount, and the lender’s fees and margins. Here are some tips to find the best VA loan rates:
Shop around:
Get quotes from multiple VA-approved lenders and compare their rates and fees to find the most competitive offer. Don’t be afraid to negotiate and ask for discounts or waivers.
Improve your credit score:
The higher your credit score, the lower your interest rates will be. Work on improving your credit score by paying your bills on time, keeping your credit balances low, and correcting any errors in your credit report.
Consider the type of loan:
The type of VA loan you choose can affect your interest rates and closing costs. For example, if you choose a fixed-rate loan, you’ll have more predictable and stable payments, but you may pay a higher interest rate than with an adjustable-rate loan that starts with a lower rate but could increase over time.
Negotiate with the lender:
Don’t be afraid to ask your lender