What to Expect during the VA Home Loan Approval Process

The VA home loan approval process has several steps that are not used in a standard home loan approval. These steps are all designed to work in your favor. However, since you are dealing with a bureaucratic process, you can expect extra paperwork, time and hassle to finally reach the conclusion of your funding.

Certificate of Eligibility

The first step to secure a VA home loan is getting your certificate of eligibility for the loan from the Department of Veterans Affairs. You can do this online in a few simple steps; all you need is your personal and military information. If you have been discharged from the military, the terms of you discharge are important. You will not be eligible if your discharge was dishonorable, and even an other than honorable discharge can hold up the process.

Once you fill out the application for your certificate, the VA will process your application in just a few days. You will be able to print off your certificate at home. The certificate states the amount of guaranty you qualify for based on your military service. This is not the actual guaranty, however, just the first step to securing the guaranty.

Application for Private Loan

Once you have this certificate, you will take the paper to a private lender. It is best to work with a lender that is VA approved or familiar with the VA loan process. The lender will review your credit, assets and income along with this guaranty to determine if you are qualified for the loan. The guaranty will allow you to place no money down, and you may also find the credit requirements are a little looser if you have the guaranty than if you do not.

Application for VA Loan Guaranty

Either you or your lender will submit paperwork to apply for the guaranty, which is essentially insurance on your mortgage provided by the VA. The VA will check to see you meet these criteria. It is okay if your income is lower than average or your credit history is short as long as you meet these basic qualifications:

  • No delinquent debt payments for 12 months
  • Any Chapter 7 bankruptcy is at least two years old
  • Any Chapter 13 bankruptcy has been paid in a timely way and authorization is required
  • You have not experienced a foreclosure in the past two years
  • You have no delinquent federal debts
  • Any outstanding collections against you are small
  • Any judgments against you have been resolved, including tax judgments

VA Loan Guaranty Funding Fees

There will be fees imposed by your lender to fund the loan as part of the closing costs on the financing. The VA does not accept all of these fees. For example, the VA will not accept fees imposed for filing paperwork, taking photographs, broker fees and other miscellaneous payments. A VA qualified lender will know these regulations. The lender and the VA will have to come to an agreement about any unexpected fees, and you will then be able to sign your loan contract and purchase your home.

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