The VA Loan Pre-Approval Process in Colorado

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The pre-approval process follows pre-qualification. With an official pre-approval letter, sellers and realtors know you’re a serious buyer and have financing lined up. It’s not a guarantee of approval, but it’s one step closer.

Unlike the prequalification process, I’ll need documents proving everything you stated on your application. This starts the preliminary underwriting process, bringing you one step closer to homeownership.

Documents Needed for VA Pre-Approval

Lenders need proof of your income, assets, and any other financial issues you encounter to make a sound decision.

Gather your pay stubs, W-2s for the last two years, tax returns (if you’re self-employed), and any divorce decrees or child support documents (if you pay them).

Lenders use these documents to determine your eligibility. They look for:

• Stable income and employment – They prefer a 2-year history, but if you changed jobs, had a small gap, or made changes, it’s not a deal-breaker. Lenders may need to do a little more research, though.
• Decent debt-to-income ratios – All borrowers have debt. Lenders measure the debt compared to your gross monthly income to make a decision. Ideally, your DTI should be less than 41 percent, but many lenders allow higher DTIs if you have other qualifying factors, including a higher amount of disposable income than is required for your family’s size.
• Decent credit history – Derogatory credit isn’t a deal-breaker either, but it may require more research into your financial history. Have explanations for any negative credit accounts, and proof that you’ve overcome them ready.

Lenders use this information to pre-approve you for a loan. While it’s not a final approval, it’s one step closer to owning your own home. Your pre-approval is contingent on the property itself (when you find one) and the conditions written in the letter.

The Pre-Approval Letter

Once lenders evaluate your qualifying documents, they’ll issue a pre-approval letter. The letter states the loan amount the lender approved you for, the interest rate, and the terms. It will show you are applying for VA financing and what conditions you must satisfy to qualify for the loan. With some of the underwriting out of the way, this speeds up the loan closing process once you find a home.

Finding a Home

After you sign a sales contract, lenders complete the underwriting process. We’ll send the executed contract to the lender, who will order an appraisal, and clear any conditions still open. We’ll work together gathering documents and clearing conditions as quickly as we can.

Once the lender approves the appraisal and clears all conditions, you’ll move onto the VA loan closing process, bringing you one step closer to homeownership.

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