How To Apply for a VA Home Loan: 7 Steps

Learn More About Eligibility and VA Loan Applications

Applying for a VA loan backed by the Department of Veterans Affairs can be a smart way for eligible veterans, active-duty military, other service members, and some surviving spouses to purchase a home with favorable terms. Unlike conventional loans, VA loans offer perks such as no down payment, no private mortgage insurance (PMI), lower interest rates, and limited closing costs.

This article breaks down the process of applying for a VA loan into seven clear steps. Whether you're a first-time homebuyer or re-exploring your benefits, understanding the VA loan application process before you start can boost your confidence and make it a quicker, easier experience.

1. Confirm Your VA Home Loan Eligibility

To be eligible for a VA loan, you'll want to make sure you meet service requirements and financial and property requirements. You'll also need to obtain a Certificate of Eligibility (COE). Here's a break-down of the requirements you can expect.

• Service requirements: To meet the VA loan service requirements, you must meet at least one of the following requisites:
   
  • 90 consecutive days of active service during wartime.
  • 181 days of active service during peacetime.
  • 6 years of honorable service in the National Guard or Reserves.
  • You were discharged due to a service-connected disability.
  • You're an unremarried surviving spouse of a veteran who died in service or due to a service-connected disability.
• Certificate of Eligibility (COE): This is an official document issued by the VA that proves you meet the service requirements to qualify for a VA home loan. You can get a COE online or by mail.
• Credit and income: While the VA doesn't set a minimum credit score requirement, many lenders look for a score of 620 or higher. At Freedom Mortgage, we can often accept a score of 550 or above when you apply for a VA loan. Additionally, lenders generally look for a stable income and a debt-to-income ratio (DTI) under 41%.
• Property requirements: The home you're looking to finance with a VA loan must be your primary residence (no vacation or investment properties).

2. Find a VA-Approved Lender

Finding a VA-approved lender is essential to apply for a VA home loan. These lenders are specifically authorized to handle VA loans and understand the unique requirements involved. Key qualities to look for in a VA lender include a deep knowledge of the VA loan process, transparency with fees and rates, and a solid history of working with veterans and active-duty service members.

Freedom Mortgage is a top VA lender in the United States, according to Inside Mortgage Finance in 2024. We have extensive experience helping service members achieve homeownership and are committed to making the process smooth and accessible.

3. Prequalify for a VA Home Loan

The prequalification process for a VA loan is an important first step in buying a home. It involves a basic review of your financial situation to give you and your lender an estimate of how much you can afford. While it's not a guarantee of loan approval, it helps set a realistic price range for your home search and tells sellers that you're a serious buyer.

Prequalification also allows lenders to identify any potential issues early in the process, giving you time to improve your financial standing if needed. Knowing how much you can realistically afford on a home helps you avoid wasting time on homes outside of your budget and helps you make informed decisions when you're ready to make an offer.

4. Make an Offer

When you find the right home, the next step is making an offer, which includes the proposed purchase price, any contingencies (i.e. securing financing or getting an inspection) and a timeline for closing. Once a seller receives your offer, they can accept it, reject it, or make a counteroffer. When a counteroffer is made, it usually entails changes to terms like the price, closing date, or included items. There are a couple potential hiccups in the offer stage of buying a home, such as disagreements over who will cover repairs or appraisal issues, but being flexible, reasonable, and working with a real estate agent can help any negotiations go smoothly.

Once your offer is accepted by a seller or you reach an agreement after a counteroffer, a purchase agreement is created detailing all the terms and conditions of the sale. Once both parties sign it, it becomes legally binding.

5. Complete Your Loan Application

Applying for a VA loan is similar to applying for any mortgage. You'll need to complete an application and verify your income, credit history, and debt with various forms (such as W-2 forms or pay stubs). You'll also need to submit your COE to prove your service history. To learn about what happens after you apply with Freedom Mortgage, read this article about our mortgage application process.

6. Get a Home Appraisal

A home appraisal is an important part of the VA loan process, especially given that there are specific VA appraisal requirements. A VA-approved appraiser will evaluate the property to determine its fair market value and ensure it meets the VA's Minimum Property Requirements (MPRs), which include basic safety, sanitation, and structural integrity. The appraisal protects both you and the lender by confirming that the home is worth the loan amount being requested.

This stage is also when the underwriting process begins. Underwriting is the lender's detailed review of your financial information to ensure you meet loan qualifications. The underwriter also examines the appraisal report to make sure the property meets VA standards. If everything checks out, the loan will likely be approved and you'll be able to close on your home.

7. Close on Your Home

On closing day, you and the seller will sign all necessary legal documents to transfer ownership of the property. You'll pay closing costs and the down payment (if you decide to put money down; remember it's not required for VA loans). You'll also pay the VA funding fee, which helps cover the cost of the VA program. This one-time fee can either be paid upfront at closing or financed into your loan.

Applying for a VA Home Loan FAQs

Here are some of the common questions we've received about applying for a VA home loan.

How Long Does it Take to Get a VA Home Loan Approved?

The time it takes for a VA home loan to be approved can vary, but it typically takes around 30 to 45 days from the time the purchase agreement is signed. Several factors impact the approval timeline, such as how quickly you provide required documents, the results of the home appraisal, and how smoothly the underwriting process goes. Working closely with your lender and staying on top of your responsibilities can help expedite the process.

Can I Get a VA Loan if I Have Bad Credit?

Yes, it's possible to get a VA loan even if you have bad credit. The VA itself doesn't set strict credit requirements, but many lenders prefer a score of around 620. At Freedom Mortgage, we can often accept a score of 550. Check out our article on VA credit score requirements to learn more about what options are available to you if your credit isn't ideal.

Are There Loan Limits for VA Home Loans?

Loan limits on VA loans depend on the entitlement you have. Entitlement is the amount of money the VA guarantees on your behalf in case you were to default on your loan.

If you have full entitlement, you can borrow as much as your lender is willing to approve without a down payment, and you won't have loan limits for VA home loans. However, if you have remaining entitlement, which is often the case if you still have an active VA loan or have used part of your entitlement before, loan limits may apply. Your lender or a VA loan specialist can help you understand your entitlement status and how it affects your loan amount.

Closing Thoughts on Applying for a VA Home Loan

Getting a VA home loan is a smart way to take advantage of the benefits you've earned through your service. When you prequalify for a VA mortgage, you gain a clearer picture of your budget and can move through the application process with more confidence. Start the process today and take a step closer toward owning a home through a VA loan.