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The VA Loan Process in 8 Easy Steps | PenFed Credit Union

What you'll learn:Learn how to obtain a Veterans Affairs (VA) home loan.


The VA Loan Process in 8 Easy Steps

The Veterans Affairs (VA) home loan program makes it possible for eligible service members, veterans, and surviving spouses to become homeowners without the worry of a high down payment or less-than-perfect credit history. Plus, you can often secure the best rates in the industry. Sound good? We’ll take you through the VA loan process, step by step, , and explain how to apply for a VA loan.

Step 1: Understand VA eligibility and qualifications

What are the qualifications for a VA loan? To get approved for the loan, you must meet standards set by the VA and your lender. Following are VA requirements and common financial guidelines.

  • VA Certificate of Eligibility (COE) Proof you meet the VA’s military criteria
  • Credit score – No minimum set by the VA; lenders prefer 580 or higher
  • Debt-to-income ratio (DTI) – 41% or lower
  • Proof of income – Documentation showing consistent income sources
  • Down payment – As low as zero down
  • VA minimum property requirements (MPRs) – Strict safety standards verified by a VA-backed appraiser
  • Primary residence requirement – Not available for second homes or investment properties

For a deeper dive, see what you need to qualify for a VA loan.

Step 2: Find a VA-approved mortgage lender

Shopping around for a lender is about more than finding the lowest rate. You want someone who specializes in VA loans, has common values, and truly cares about your success. Many military families find that a credit union checks all those boxes.

Questions to ask a potential lender:

  • How many VA loans do you service each year?
  • What type of loan is best for me?
  • What costs can I expect when working with you?

Step 3: Get preapproved or prequalified for a VA loan

Once you’ve selected your VA lender, or at least narrowed down the list, it’s time to get prequalified for a loan. Prequalification is not an official stamp of approval, but it will set the parameters of how much home you can likely afford.

The process varies, but it usually involves you sharing some preliminary income details. The lender then completes a soft credit check, which doesn’t affect your credit score, to make that initial estimate. Once you find a property and are ready to make an offer, they’ll work with you on preapproval, which requires more documentation and a hard credit check.

Step 4: Find a knowledgeable VA real estate agent

You’re not required to use a real estate agent, but they can be a worthwhile asset during your homebuying experience. When you interview potential agents, let them know you plan to use a VA loan. Make sure they have extensive VA experience and can guide you through the process with confidence. They should show you only properties they believe meet the VA’s property standards.

When it comes time to make an offer, they’ll work on your behalf to negotiate the best possible deal – which may include the seller paying some of your closing costs. The VA even offers homebuyers protection from having to pay any real estate agent commission fees.

Step 5: Complete your VA loan application

You found the house, received an accepted offer, and are ready to march forward. Your lender will now ask for all of the required documentation to ensure it’s safe to offer you the loan. Here are the most common documents required, some of which you may have already provided to get preapproved. 

VA application documents:

  • VA Certificate of Eligibility (COE)
  • Government-issued ID
  • Bank statements from the last two months
  • Pay stubs from the last 30 days
  • Tax returns – business and personal – from the last two years
  • W-2s or 1099s for the past two years
  • Retirement statements from the last two to three months
  • Social security award letter

Your speed and quality of documents will help underwriters work efficiently as they review your application. We’ve compiled some tips to help. Be prepared to answer questions or provide additional details if further clarification is needed.

Step 6: Review your VA loan estimate

Within three business days of receiving your application, your lender is required to provide a loan estimate. This three-page document details important figures including your anticipated down payment, interest rate, monthly payment, VA funding fee, and total closing costs.

A loan estimate is not an official approval or a final offer of rates and costs. But it’s a helpful document to get a realistic view of what you’ll be responsible for paying if it moves forward. Take time to review the pages, ask questions, and compare choices if you’re still deciding between more than one lender. Now is the time to crunch the numbers and make sure you can afford the upfront costs and monthly payments.

Step 7: Schedule a VA home appraisal

The VA sets strict standards when it comes to property use and condition.VA minimum property requirements (MPRs) are in place to make sure your home is safe, sound, and sanitary before moving in. They are safeguards to prevent you from buying a home that’s dangerous or in need of expensive repairs.

VA appraisers review specific criteria including the amount of space, evidence of pests and rot, roof stability, sanitation, and presence and condition of the heating system. They’ll also perform a traditional appraisal to estimate the home’s current market value.

Any number of issues can slow down the loan process during this step, including property safety concerns and the need to renegotiate an offer due to an appraisal coming in lower than the amount you agreed to pay.

Step 8: Sign and pay VA closing costs

This is where all the moving parts come together. Your loan is approved, the appraisal checked out, and your offer is set in stone. Time to make it official by signing on the dotted line and paying upfront costs.

A long list of fees due at closing can feel overwhelming. The good news: The VA protects you from certain costs like escrow fees, lock-in rate fees, and application fees. They also make it possible to reduce upfront expenses and avoid some closing costs altogether. That’s another reason to work with a lender and real estate agent with experience working with VA loans and borrowers.

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Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

VA Disclosures

1Rates are updated daily at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.