Getting preapproved for a VA home loan can help make the home buying process smoother. Preapproval shows sellers that you are a serious buyer who has been vetted by a lender. This guide will cover everything you need to know to get preapproved for a VA loan.
What is a VA Home Loan?
VA home loans are mortgages guaranteed by the Department of Veterans Affairs that allow eligible buyers to purchase a home with no down payment. Some key features of VA loans include:
- No down payment required
- No monthly mortgage insurance payments
- Competitive interest rates
- Can be used for new construction
- Allows for seller concessions
VA Loan Eligibility Requirements
To qualify for a VA home loan, you must meet the following criteria:
- Minimum 90 days of active duty service
- Discharged other than dishonorable
- Meet VA residual income guidelines
- Have a VA entitlement available
- Provide evidence of 12 months rental/mortgage payments
Be sure to check if you meet all eligibility requirements for a VA loan before applying.
Gather Documentation for Preapproval
Lenders will want to verify certain pieces of documentation before preapproving you for a mortgage. <i>Having these items ready ahead of time can make for an easier application process.</i>
To confirm your income, gather the following:
- W-2 forms for the last two years
- Recent pay stubs showing year-to-date earnings
- Documentation of any other income like bonuses, commissions, or investments
Lenders will want to see your most recent one to two years of tax returns to verify additional income sources.
Debt and Credit Documentation
You’ll also need documents showing all current debts and credit accounts such as:
- Credit card and loan statements
- Debt to income ratios
- Credit score information
- Downpayment source documents
Choosing a VA Lender
Not all lenders offer VA loans, so make sure to find one familiar with the program’s guidelines. Ask friends for referrals or search online for top rated options.
Some aspects to research with potential lenders include:
- Years of experience with VA loans
- Variety of VA loan products offered
- Turn times getting preapproved
- Background checking VA guidelines
Questions to Ask Prospective Lenders
Here are some key questions to ask when vetting VA lenders:
<ol> <li>How long have you been making VA loans?</li> <li>What are your rates and fees like compared to competitors?</li> <li>Who services your VA loans if they are sold?</li> </ol>
Getting answers to questions like this can help you find the right fit.
Submit Your VA Loan Preapproval Application
Once you choose a qualified lender, you can submit your preapproval application online or in person. Be prepared to provide:
- Your VA Certificate of Eligibility (COE)
- DD214 discharge papers
- Income/tax documentation
- Debt/credit info
- Downpayment source funds
- The loan amount you hope to qualify for
- The property type and price range you are targeting
Providing complete details upfront will help smooth the preapproval process.
Get Preapproved Letter from Your VA Lender
Within a few days or weeks, your lender will review your application and verify your details. If approved, you will get a preapproval letter indicating:
- The max loan amount you qualify for
- The interest rate
- Maximum monthly payments
- Expiration date of preapproval
With your preapproval letter in hand, you can confidently start searching for homes within your approved price range and loan terms.
Preapproval vs. Prequalification for VA Loans
Prequalification provides a less formal initial estimate of your potential max loan amount. Preapproval takes that extra step by having your lender verify your details before finalizing loan terms.
How Long Does Preapproval Last?
A VA loan preapproval letter is typically valid for 60-120 days. If you don’t finalize a home purchase by the expiration date, you may need to renew your preapproval. Rates and loan terms could also change beyond 120 days.
Use Your Preapproval When Making Offers
When you make an offer on a home as a preapproved buyer, sellers will take your bid more seriously. Be prepared to include a copy of your preapproval letter. This shows listing agents and sellers that a reputable lender has already vetted and approved you for financing.
Strengthen Your Offer with a Preapproval
As a VA preapproved buyer, you have a strong chance of beating out other buyers without financing locked in. Use your letter as a negotiation tool and closing guarantee.
Next Steps After Getting Preapproved
Once preapproved, you can shift focus to the exciting work of evaluating your home options and making offers! Here are some next steps:
<b>1. Shop homes within your approved price range and features</b>
Stick to homes that fall at or under the max loan amount your lender has qualified you for.
<b>2. Make offers right away when you find “the one”</b>
As a preapproved buyer, you can act fast when that perfect home pops up so you don’t miss out. Submit your preapproval letter and earnest money deposit along with your offer.
<b>3. Get inspections done after offer acceptance</b>
Your offer will likely be contingent on a clean home inspection report. Complete this quickly so there are no financing road blocks.
<b>4. Confirm final loan approval with your lender </b>
They will vet the home’s appraisal value and your remaining docs before closing. You’re well on your way to financing your home with a VA loan!
Frequently Asked Questions
<b>Here are answers to some common questions about getting preapproved for a VA home loan:</b>
<b>Can I get preapproved online?</b>
Many VA lenders allow you to complete preapproval online by submitting documents electronically. But you may need to work directly with a loan officer as well.
<b>How long does VA loan preapproval take?</b>
Preapproval can take anywhere from 2 days to a few weeks depending on lender turn times and how promptly you submit required documents.
<b>What VA loan terms should I aim for?</b>
Look for the lowest combination of interest rate and fees to maximize savings. Lock in rates for as long of a term as fits your budget such as 15 or 30 year fixed rate mortgages.
<b>Can I use my VA preapproval letter with any seller?</b>
Yes, your VA preapproval letter gives you the flexibility to make offers on any home for sale within your qualified price range and loan amount.
Final Thoughts on Getting Preapproved
As a qualified VA loan applicant, getting preapproved is a pivotal step toward buying your home sooner rather than later. Shop lenders, submit your full application promptly, and be ready to make quick offers with your approval letter in hand. You’ll have the financing certainty and confidence needed to be a strong buyer in today’s competitive housing market using your hard-earned VA home buying benefits.