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What to Know Before Shopping for a VA Home Loan


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TERMINOLOGY

Many military members are unfamiliar with how a VA home loan actually works. One important aspect of a VA home mortgage loan is your ability to obtain a pre-approval for a maximum amount the lender will give you for the purchase of a new home. Once you know the ceiling for the home’s price, you can then narrow down your search in order to find the right home for you.

VA Loan Pre-Approval

Before you start searching for a home to buy, it is beneficial to complete a loan application and submit it to your lender for pre-approval. This will save you some time, since it will eliminate the need for you to search for homes that are out of your price range. Make sure to consider the mortgage loan payments carefully before you decide to use a fixed or adjustable rate VA loan.

If you are pre-approved by your lender, you will still need to update the loan application if you do not find a home to buy within a reasonable amount of time. The length your pre-approval remains valid depends on the lender’s loan guidelines.

If you are unable to get pre-approved for a VA loan because of a high debt-to-income ratio or bad credit that you are in the process of fixing, continue to work toward resolving the issue and then simply re-apply for another loan once you are ready.

Eligibility Requirements

In order for a lender to be able to approve your VA loan application, you must have proof of service in the form of a Certificate of Eligibility from the VA. If you are a veteran and you do not have proof, you can contact the National Personnel Record Center, or NPRC, and they will issue you a free Defense Department Form 214, or DD214.

If you are on active duty, the VA requires a statement to be signed by your unit commander for proof of service.

In addition, you will also need to provide the last two years of information about your employment, as well as the names and addresses of these companies.

Co-Borrowers

A co-borrower is allowed to apply for a VA loan with you, however their portion of the VA loan will not be guaranteed by the VA if they are a civilian. The guarantee will apply if both borrowers are current or former members of the military.

Your co-borrower will have to fill out a loan application, and submit it to the lender for approval. Any required information concerning the co-borrower’s income will have to be verified, and tax returns may need to be supplied if the lender requires them in order to make a decision on your joint VA loan. In addition, the co-borrower’s income cannot be the sole source used for the loan repayment.

Also, if you or your co-borrower own other property, the address information and loan specifics must be provided.