If you are an eligible current or former member of the Armed Forces, a VA home loan may be your best bet for getting into a new home — not to mention a VA loan is one of the most attractive and generous loan products available.
A VA loan is a special loan that is offered by certain private lenders (e.g., banks, mortgage companies) but guaranteed by the Department of Veterans Affairs. It offers low credit requirements and little to not down payment, and it’s designed to help eligible military personnel afford comfortable homes they otherwise might not be able to afford. At Lowder New Homes, we offer additional perks for people buying a home with a VA loan, including $1000 toward closing or moving costs as well as $5000 worth of upgrades for qualified homes. Whether you’re in active service or retired, Lowder has your back.
Of course, since you’re effectively working with the government, obtaining a VA home loan is a process that requires patience. The following step-by-step process should help take some of the stress out of it.
Start the Application Process As Soon as Possible
We highly recommend looking into your VA loan as soon in the house hunting process as possible — even before you start looking for a home. You can get pre-qualified and/or pre-approved for a VA loan the same as you can for any conventional loan, and doing so greatly simplifies the rest of the buying process because you know exactly how much home you can afford.
Determine Your Eligibility
VA loans have fairly generous eligibility criteria, but they aren’t for everyone. To qualify, you must meet at least one of the following conditions:
- You served on active duty during wartime for at least 90 consecutive days (i.e., you are a veteran)
- You served at least 181 consecutive days in the military during peacetime
- You served at least 6 years in the National Guard or in the reserves
- You are a surviving spouse of a service member who died in the line of duty or from a service-related disability
Find a Lender Who Does VA Loans
Once you’ve determined that you qualify for a VA loan, your next step is to identify and approach with a lender who processes these loans. You can typically find several good VA lenders in minutes using a simple Google search for your area. Not every VA loan is the same — interest rates and fees may vary — so you may want to talk to several lenders and compare costs before deciding to work with one.
Obtain a Certificate of Eligibility (COE)
The Certificate of Eligibility (COE) is a critical part of your loan paperwork that proves to the lender that you’re eligible for a VA-backed loan. You’ll need to supply certain documentation to prove your eligibility (you can find a list of possible supporting documents here). You can obtain your COE in one of three ways:
- Apply online yourself through the eBenefits portal;
- Apply directly through your lender (if the lender has access to the Web LGY system, which most VA lenders do); OR
- Apply by mail by filling out VA Form 26-1880.
Get the Rest of Your Documentation in Order
Along with your COE, you’ll need to meet minimum creditworthiness and income standards to qualify for your VA loan, similarly to qualifying for any other type of loan. The standards are usually generous, but you’ll need to document your income and credit to meet the lender’s criteria. The lender can give you more details about what is needed.
Find the Home You Want
With your initial loan qualifications now in place, the next step is to shop for a home within your budget. If you got VA loan preapproval, you now know the limits of your budget and can shop accordingly. If you’re shopping for an existing home, you’ll want to work with a trusted real estate agent. If you’re thinking to buy a new construction home, you can work directly with the builder.
Sign a Purchase Agreement
When you find the home you want and are ready to sign the purchase contract, you’re at another critical step: Make sure your purchase agreement contains a “VA option clause.” The VA provides a good example of such a clause:
“It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs.”
For additional protection, you may want to include an escape clause in the contract that say you can get out of the deal if for some reason you can’t obtain the VA loan.
Complete the Loan Process and Close on Your House
From this point forward, the loan process should proceed similarly to that of any other home purchase. The lender may ask for more documentation and clarification along the way until you reach the closing table. Avoid making any large purchases or applying for more credit during this time, as the lender will pull another credit report before closing and you don’t want to raise any red flags as to your eligibility.
Lowder New Homes is proud of and grateful for our service men and women, which is why we offer generous additional incentives to help them get into a new construction home. To learn more, call us today at 334-270-6789.