VA Loan Process

Introduction to the VA Loan Process – How VA Loans Work

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Eligible veterans may have VA financing options without a required down payment, subject to lender approval. Closing costs and a VA funding fee may apply unless exempt; buying rather than renting depends on your circumstances.

VA-backed loans are made by participating lenders. I can help you review available terms and the VA's role in the process.

How the VA Helps Veterans

The VA’s guarantee helps you get the following benefits:

• Eligible purchases may not require a down payment, but an appraisal, lender review, closing costs and any applicable funding fee still matter
• Low interest rates and the ability to pay discount points to further lower the rate
• No prepayment penalty, enabling you to pay the loan off in full at any time
• Reputable appraisal ensuring the home is worth at least as much as the purchase price and meets the Minimum Property Requirements
• VA compliance inspection ensuring new construction homes are safe, sound, and stable

To be eligible for the above, the VA requires proof of:

• Your entitlement as a veteran
• The loan is for the purchase or refinance of your primary residence
• Your decent credit risk (based on the lender’s requirements)
• Your income (and that of your spouse if applicable) that’s enough to cover the loan and your monthly obligations

How the VA Doesn’t Help Veterans

The VA’s guarantees aren’t legal protection. They ensure that everyone working on your loan puts forth 100 percent effort, but there are no guarantees. The VA doesn’t guarantee the home is in perfect condition and they also cannot act as your architect or attorney regarding any issues you may have with new construction.

The VA doesn’t have any authority over builders, forcing them to fix defects or to make good on their contract. The VA also doesn’t give any promises that you will be 100 percent satisfied with the home, with or without defects. The VA also doesn’t ensure that you can sell the home at a specific price.

Do your Due Diligence

Don’t rely on the VA’s guarantee, allowing you to assume everything will be perfect. The VA’s guarantee is for the lender only. Yes, they do have your back and require lenders and appraisers to do their due diligence too, but in the end, you must be comfortable with your decision.

If you buy an existing house, I encourage you to pay for a home inspection. Take this step before you move forward with financing and pay for an appraisal. Inspectors are trained professionals that look for serious defects in a home. Even though a VA appraiser ensures the home meets the VA’s Minimum Property Requirements, there is no guarantee the home is in perfect condition. Appraisers aren’t inspectors. If you want reassurance the home is in good condition, talk about an inspection contingency on your purchase contract, and arrange an inspection shortly after the seller accepts your bid.

If the inspector finds problems with the home, discuss it with the seller and/or your real estate agent. Many sellers will negotiate the sales price, make the repairs, or offer a credit at the closing to make up for it. If the issues are too large, though, the home may not pass the VA appraisal, which is good to know before you get too far into the process.

Understand the VA Application Process

The VA application process is simple. We start with the loan application and collecting your income, asset, and liability documentation. I’ll pull your credit report to check your credit score and credit history. Once we have all the necessary documentation, I forward it to the VA-approved lender who processes your loan.

The lender reviews your qualifications, the sales contract and any property requirements, including an appraisal when required. Closing depends on satisfying all loan conditions and any applicable VA review.

The VA sets the basic guidelines or VA loans, but the VA lenders set the requirements. Working with veterans for many years, I’m happy to work with you, securing a VA loan pre-qualification or pre-approval depending on how quickly you’re ready to buy a home.