VA mortgage loans are one of the biggest benefits available to active-duty military service members, veterans, and, in some cases, their spouses. The U.S. Department of Veterans Affairs does not issue VA loans, but it does guarantee them at taxpayer expense, so you can get one with a lower credit score and with no down payment. Here’s what you need to do to get one.
Make Sure You Qualify
The first step in getting a VA home loan is to make sure you qualify for the program. You must have given:
181 days of active service during peacetime, or
90 consecutive days of active service during wartime, or
More than six years of service with the Reserves or National Guard or 90 days under Title 32 of which at least 30 of said days should be consecutive.
If you are the spouse of a military service member who was killed in the line of duty or lost their life to a service-rated disability, you may also qualify for a VA home loan as long as you meet the criteria for surviving spouses.
Review Your Finances
The VA doesn’t require you to make a down payment in order to qualify for a VA loan, but your lender might. Even if you don’t have to make a down payment, you’ll still have to cover closing costs, which run about three to six percent of your loan amount. You’ll also have to pay a funding fee of 1.4 to 3.6 percent of your loan amount. Of course, once you get the loan, there’ll be mortgage payments to make and repairs to plan for. You should review your finances to make sure you can cover these costs, and clean up your credit so you can get the best interest rates.
Get Your Documents in Order
You’ll need some documentation in order to prove to lenders that you qualify for a VA loan. Start with your Certificate of Eligibility (CoE), which you can request from the VA yourself. A lender can also help you get a CoE if you need assistance. If you’re a veteran, you’ll need a copy of your DD Form 214. If you’re still on active duty, you will need to ask your personnel officer to provide a signed statement of service for the VA loan.
If you’re a National Guard member or veteran, you’ll need your DD Form 214 showing Title 32 sections 316, 502, 503, 504, or 505 activations. You’ll also need an annual point statement and a copy of your DD 220 showing orders. If you haven’t been activated yet, you will need to get your commanding officer to sign a statement of service. If you were discharged without ever being activated, you will need to contact the National Guard Adjutant General’s office to get a copy of your NGB Forms 22 and 23. If you were discharged from the Reserves without being activated, you will need proof of honorable service and discharge, as well as a copy of your Retirement Points Statement.
If you’re the surviving spouse of a military member, you’ll need your spouse’s DD Form 214, a copy of your marriage license, and a copy of your spouse’s death certificate. You’ll also need to fill out VA Form 21P-534-ARE.
Choose a Lender
Once you have your finances in order and you have your paperwork, you’re ready to approach lenders. It’s a good idea to shop around to different lenders because some lenders might offer you better loan terms than others. Once you’ve chosen a lender, get a pre-approval letter so you can start house shopping. Sellers will take your offers more seriously if you can show that you’ve been preapproved for the home loan.
Make an Offer
Shopping for a house with a VA loan is the same as shopping for one with any other loan. Once you’ve found a house you like and have an offer accepted, you’ll enter the underwriting process.
Go Through the Underwriting Process
The property you buy will need to meet the VA’s Minimum Property Requirements, which means that the home should be safe, sanitary, and in move-in-ready condition without the need for major repairs. The VA appraisal process is stricter than it is for conventional loans. Your home will have to undergo VA inspections and you may need to provide more documentation during the underwriting process.
Close on Your New Home
Underwriting can take a couple of months, but once you’re through it, you’ll get a closing date. You’ll need to be prepared to pay closing costs and funding fees at the time of closing. Once you get the keys, you’ll be ready to enjoy your new house!
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