What to Expect as a VA Loan Buyer

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If you’ve served your country as a member of any branch of the US armed forces and you’ve been honorably discharged, you may qualify for a guaranteed VA loan. Many eligible servicemembers who qualify wonder: how do VA loans work, how do you qualify for one, and what is the process like?  It is more difficult than getting a conventional loan?

We’re going to tackle a few of those questions in this “what to expect” guide.

What’s a VA Loan?

Many veterans are aware that they’re eligible for a VA loan, but they don’t really know what a VA loan is. They think it’s a loan provided by the Veteran’s Administration, but this isn’t actually the case.

VA loans are low down payment, low interest loans that are federally guaranteed through the VA. The loans are actually provided by commercial lenders, just like any other loan. That means there are many lenders and originators who can help you get a VA loan.

What is the VA loan guarantee?

The VA loan guarantee isn’t a guarantee that every veteran who qualifies will get a loan. The guarantee isn’t for the borrower, it’s actually a guarantee to the lender that says that if the borrower defaults, the VA will reimburse the lender for some portion of the loan. It’s an incentive to the lender to provide the best loans and rates to qualified veterans.

Veterans of any branch of the US armed forces – Army, Air Force, Coast Guard, Marines or Navy, active duty, reservist or National Guard – may qualify for a VA home loan by proving they meet eligibility requirements and providing the required documentation. VA loans are very well documented and follow a required process to ensure that both the lender and the borrower are protected and understand the terms of the loan.

Is it hard to get a VA loan?

We mentioned documentation; there’s quite a bit of it for a VA loan, but most of this documentation is actually handled by the lender. The servicemember provides most of the same types of documentation they normally would for any loan, such as:

  • Authorization to pull credit.
  • Social security number – you provide this and your current residence on an application.
  • Proof of employment and proof of income – this is usually your most recent pay stubs.
  • Tax Information – Usually, the last two years. Proves ongoing income and stable employment.
  • Bank Accounts and Balances – Lenders want to know what assets you already have and whether you have cash to close.

In addition, there’s some specific documentation you need to provide to determine your eligibility with the VA. There’s also a unique process to determine if the home you want to buy meets the VA guidelines (the VA requires, for instance, that all VA loan properties be habitable). Because of some of these unique processes VA loans can take a bit longer than conventional loans.

What lenders can I work with?

Most mortgage brokers can originate or submit applications for VA loans, although some prefer not to. The VA doesn’t require you to work with specific lenders. However, if you want your process to go more smoothly and to have the most expertise available, we recommend that you work with a VA approved lender.

A VA approved lender does more than just originate VA loans, they also process them in house. Lenders that are not approved by the VA can originate loans but they have to submit then to be processed elsewhere – these lenders are at a disadvantage since they are less able to resolve issues in a timely way. This can impact your ability to close on time in some cases.

If you want your process to go smoothly, ask for a VA approved lender.

What are the credit requirements?

Because the VA isn’t actually providing the loan, VA borrowers still have to meet lender credit requirements. These include:

  • Credit Score

    – The VA does not have a minimum credit score to qualify for VA loan, but many of the actual lenders who will provide the loans do. A commonly used benchmark would be a score of around 620. This does not mean scores below this benchmark won’t be considered, but they may require lenders to scrutinize the entire loan package more carefully.

  • Income

    – One benefit of the VA loan program is that the monthly debt-to-income (DTI) requirements to obtain a loan can be more flexible than with other programs. There is no maximum DTI to obtain a VA loan, although a DTI ratio of 41% is considered a benchmark for most lenders. A higher DTI may be considered with additional scrutiny of your financials.

  • No Loan Maximum

    – There is no maximum amount for a VA loan, HOWEVER, the VA only guarantees loan amounts up to $453,100 for most of the country, including Maricopa County and the Phoenix Valley. Amounts above $453,100 will require a down payment of 25% above the VA guaranty limit. VA loans above this limit are often called VA jumbo loans – a little known benefit!

What paperwork is required?

VA borrowers have to provide most of the same paperwork as any borrower looking for a conventional loan. This includes:

  • Proof of income to determine ability to pay and qualification amounts.
  • Recent bank statements to determine assets
  • Loan application and authorization to pull credit

Your lender will use this information to determine if you meet their credit and lending criteria. VA borrowers also need to prove eligibility based on their service criteria (see below for those criteria). This means the VA requires that certain forms be provided to prove eligibility. These include:

  • Certificate of Eligibility

    – Separated and retired veterans are required to provide a Certificate of Eligibility, a form that can be obtained through the eBenefits portal of the VA website. You can either obtain a copy yourself, or your lender can do it for you.

  • Statement of Service

    – Active duty, reservists and Guard members are required to provide a Statement of Service to determine their eligibility.

For separated service members, a copy of your DD-214 received at separation is helpful but not necessary for determining eligibility.

How long does it take to process a VA loan?

The VA loan is not a low documentation loan, which means that it does take time to pull together and process the documentation for the loan. You can speed things up by having everything you need, including your certificate of eligibility or statement of service, ready when you apply.

The entire process takes about 4 to 6 weeks – not much longer than a typical conventional loan. One thing that can sometimes cause VA loans to take longer is the appraisal. VA appraisals can only be done by VA-certified appraisers – normally a VA appraisal only takes about 10 days but if too many VA loans are being processed, the appraisers can sometimes take longer than usual.

How do I get pre-approved for a VA loan?

After selecting a VA approved lender, your next step is to get pre-approved. Your lender gathers all the information needed to determine how much you qualify for and actually verifies that the number are accurate.

For a pre-approval, you need to provide quite a bit of financial information, including:

  • Authorization to pull credit.
  • Social security number – you provide this and your current residence on an application.
  • Proof of employment and proof of income – this is usually your most recent pay stubs.
  • Tax Information – Usually, the last two years. Proves ongoing income and stable employment.
  • Bank Accounts and Balances – Lenders want to know what assets you already have and whether you have cash to close.

With this information, a lender can determine the actual loan amount you can be approved to receive and whether you will, in fact, be able to obtain that loan.

It’s important here to distinguish that there is a different between a pre-approval and a pre-qualification. Often, when first time buyers are looking for a home, they want to determine if they can afford the home. A lender may take some basic information over the phone and come back to them with a number. Unless you’ve actually provided the detail to back up what was discussed over the phone, this isn’t a pre-approval, it’s a pre-qualification.

Do I need a down payment?

A VA loan offers a zero down payment option up to the VA limit of $453,100. If your loan amount is below the limit you do not have to make a down payment, although you can if you choose. Above that loan amount, you must make a 20% down payment toward the difference between the loan amount and the VA limit.

What is the VA loan limit?

The VA loan limit is the amount of loan which is guaranteed by the VA without a down payment. This does not mean you are limited to that amount for your loan, simply that if you go above that amount, you have to provide a down payment.

What kind of property can I buy?

VA loans are for residential properties in which the borrower will reside, so the VA requires that the property be habitable and suitable for residential purposes. A few of the requirements that the VA uses to establish this include:


– You must be able to access the property year-round. If access requires crossing another property, easements must be in place and undisputed. Boundary lines must be far enough from the home to allow exterior maintenance.


– Property must be at least 75% residential, with a functioning bathroom, kitchen, living, sleeping and dining space. No more than 4 units should share common facilities such as laundry, storage or utilities.


– Leak-free roof, well ventilated attics, crawlspaces and basements, mechanicals in good, safe working order. Water service must be continuous and safe for drinking. Sewer or septic must be maintained and serviceable. Structures must be sound and surrounding property free of hazards.

There are many other requirements as well, but thinking in terms of these criteria will to identify suitable properties.

How does the VA determine the value of my home?

The value of your home will be determined through an appraisal, which for VA establishes two things:

  • The property value is at or above the loan amount. This is a requirement both of the VA, and the lender making the loan.
  • The property meets or exceeds VA minimum requirements.

What else do I need to know about VA loan eligibility?

To qualify for a VA loan, you need to provide proof of the following:

  • Eligible Veteran

    – You must be a veteran deemed eligible for a VA home loan based on your service criteria. See below for eligibility dates and service criteria.

  • Qualified Borrower

    – The VA is a loan guaranty program, but the money is actually loaned by financial institutions, not the VA. Therefore, you must be a qualified borrower who meets the lender’s credit, debt and income requirements.

  • Qualified Property

    – The property must qualify for a VA home loan and meet the VA’s Minimum Property Requirements. This is determined through an appraisal.

The VA home loan is a great program for buyers who may have had a few past credit difficulties, do not have a well-established credit history, or lack down payment funds. It offers some of the lowest rates available anywhere. However, it’s not for everyone. Your credit history must be “good enough” to qualify, and the VA Minimum Property Requirements entail that, among other things, a property is habitable. If you’re buying a major fixer, have extreme credit difficulties or are unable to demonstrate income, other loan programs may be more suitable.

Talk to the Mortgage Brothers Team to learn more about specific VA home loan requirements.

How does the VA determine if I meet the service criteria for eligibility?

The VA looks at two things to determine eligibility: the dates you served, and the length of time that you served. The VA uses the following criteria to establish your eligibility:

Service Era Eligibility Date Eligibility Requirement
Post-WWII 7/26/1947 – 6/26/1950 181 continuous days of service
Korean War 6/27/1950 – 1/31/1955 90 total days of service
Post-Korean War 2/1/1955 – 8/4/1964 181 continuous days of service
Vietnam War 8/5/1964 – 5/7/75 90 total days of service
Post-Vietnam 5/8/1975 – 9/7/1980 181 continuous days of service
24 Month Rule 9/8/1980 – 8/1/1990 (10/17/1980 for officers) 24 continuous months, OR the full period you were called to active duty (minimum 181 days)
Gulf War 8/2/90 – present 24 continuous months, OR the full period you were called to active duty (minimum 90 days)

Others may qualify as well, including WWII veterans with 90 total days of service, surviving spouses of veterans who died or became totally disabled on active duty or as a result of their military service, and spouses of POW/MIA servicepeople. Veterans of the US Public Health Service, US Merchant Marines, or active cadets and midshipmen at US military academies may also be eligible.

I’m ready to start looking for a home, what’s next?

You should provide your VA loan pre-approval to your real estate agent as soon as you are ready to start looking. They can use this to help you get the home you want. It’s a hot market right now in the Phoenix Valley, so that means homes are selling quickly. You and your agent should be ready to submit offers quickly, and that means it’s critical to have a solid pre-approval – NOT a pre-qualification. Your pre-approval also helps your agent determine the right price range for you.

Depending on down payment and your personal comfort level, your price range could be lower or higher than your pre-approval amount. You and your agent need to communicate clearly about this. The most important reason to have your pre-approval in hand before you start looking is that it saves time and keeps finances from complicating your decision-making. You’ll know whether you can afford the house you want and what the payments will be before you start looking.

How do I make an offer and apply for the loan?

Making an offer to buy your first home is exciting. Many buyers also find it very nerve-wracking. The best way to stay calm during the process is to be educated about the process beforehand.

You and your agent will write up the offer on the home you want and submit it to the seller. The offer will entail making a lot of decisions quickly about inspections, earnest money deposits and more, so it’s good to work out a strategy beforehand with your agent.

An updated pre-approval letter should be sent along with the offer to make sure your seller knows that you are ready and able to buy the house. Usually, you will also submit an earnest money deposit that serves as an assurance to the seller that you intend to make good on the offer. The earnest money is not kept by the seller; it goes to escrow where it will be put toward your closing costs.

After the offer is negotiated (this usually takes a couple of days) and accepted, you will need to work quickly to get a formal loan application filled out. The time limit will be spelled out in your purchase and sale agreement; usually the timeframe is 5 days, but the sooner application is made, the sooner we can start processing your loan.

What does it mean to lock my rate?

When you were first getting pre-approved for your loan, your lender may have quoted you a rate that was based on what that rate was that day, but until you make formal application and lock your rate, you won’t know your actual rate. This is because rates actually change on a daily basis depending on what is happening in the financial markets.

Locking rates can be stressful because rates can go up or down from the day you lock them. If they go up, you’ll save money because you’ll have gotten a lower rate than what might be available in the future. If they down, you miss out on the opportunity to get that lower rate.

Your mortgage lender can advise you about the best time to lock rates. If rates are very low, and starting to trend higher, your risk of missing out on a future dip in rates is outweighed by the likelihood that rates will go up, so locking in quickly is the best choice. If the trend is downward, you might be better off to “float” as long as you can. When it comes to “lock or float,” your own personal outlook and comfort with risk is likely to be the determining factor.

What does the lending process look like?

Once you’ve made formal application and locked a rate, the lender will process the loan. To avoid delays or even the possibility that your loan application will be denied, make sure to:

  1. Follow all the terms of your purchase and sale contract.

    Make sure you fully understand what actions you’re required to take by what dates in order to meet the terms of your contract. Your agent can help with this – many of them provide a calendar of crucial dates for applications, inspections, responses and waivers.

  2. Provide all loan materials requested in a timely way.

    If your mortgage lender asks for a piece of additional information, make sure you respond quickly. Your loan likely cannot be processed and approved without it.

  3. Refrain from making any large purchases on credit.

    DO NOT purchase a car, a boat, a fabulous vacation, or do an expensive renovation of your current home that you plan to sell using a home equity line, credit card or any other form of credit. This will show up on your credit report and can slow or stop your approval. It can wait.

When will I get final approval?

Final Approval for your loan usually comes in about a week before closing but there can often be delays in this process. Sometimes these delays are due to a backup at the lender if a lot of other loans need to be processed first. When lending volumes are high, lenders “triage” their approvals and handle the most urgent cases first. Delays can also be caused by issues on the buyer end – such as unusual purchases or credit activity – that causes the lender to have to re-process your file.

Will closing go smoothly?

Stay in close contact with your lender and your agent as closing approaches to make sure everyone has what they need. A few common to-dos for you around closing time include:

  • Final inspection of the home 3 – 5 days in advance of closing. The seller’s belongings should be out, or on the way out, by this time. If not, you’ll want to find out why.
  • Setting an appointment with your closing attorney or escrow agent to sign all final paperwork.
  • Key transfer – agents will often handle this for you.
  • Move-in – It’s best to delay your move in until a day or two after closing. This gives time to have the house cleaned before you move in. Unlike a rental, sellers are not required to clean carpets or paint before you move in, so if this is important you’ll need to allow time after closing to get it done.

The VA home loan program is an amazing benefit for eligible veterans who want to buy a home in the Phoenix Valley. However, it’s a program that requires expertise on the part of your lender to ensure your loan process goes smoothly. If you have questions about VA home loan requirements or you’re wondering whether you qualify, contact the Mortgage Brothers Team today for more details.