5 Things to Know Before Applying for a VA Home Loan
Applying for a home loan can be a daunting and exhausting process for any homebuyer. The process can become especially overwhelming for veterans and active-duty military members. There are, however, specific loans available to military personnel through the Department of Veterans Affairs (VA).
If you're a veteran or active military member, you may be eligible for a VA home loan. These loans offer competitive interest rates and don't require a down payment, making them an attractive option for many borrowers.
Before applying for a VA home loan, there are a few things you should know. Namely, that your credit score is just one factor in the decision-making process and that you'll need a Certificate of Eligibility. The greatest benefit to this type of loan is having no down payment required. You can even be pre-approved for your loan, too. Additionally, did you know that you can use your VA home loan for more than just buying property? That's right—you can also use it to finance energy-efficient improvements, pay off debt or buy certain types of real estate and more!
VA home loans come with unique benefits for veterans, active duty members and even including benefits for military spouses. Navigating these specific loan requirements can feel confusing, but it doesn’t have to be. Here are the top five things you should know before applying for a VA home loan.
5 Things to Know Before Applying for a VA Loan
There are plenty of misconceptions when it comes to the home loan process, even more so when looking at VA loans. Knowing what you need before applying for a VA loan can help ensure the process is less stressful and more rewarding. Below are the top factors to know when applying for a VA loan, helping you get into your dream home faster.
1. You MUST have a certificate of eligibility.
The Certificate of Eligibility (COE) is required in order to apply for a VA home loan. The COE verifies to the lender that you are eligible for the VA home loan benefit based on your service history and other factors. You can get your COE through your lender, or you can get it yourself through the Veterans Administration eBenefits portal. You can also do this by completing the VA Form 26-1880 and submitting it to your local VA regional loan center.
2. There is NO minimum credit score required.
Your credit score is important, but it’s not everything when it comes to VA loans. Unlike conventional loans which generally require a credit score of 620 or higher, there is no minimum credit score required for a VA loan. Keep in mind that lenders may still have their own credit requirements borrowers will need to meet in order to qualify for the loan.
Your credit score is one factor that will be considered when you apply for a VA home loan, but it's not the only factor. Lenders will also look at your employment history, income, and debts when determining whether or not to approve your loan. So even if your credit score isn't perfect, you may still be eligible for a VA home loan.
3. You can get pre-approved BEFORE finding a home.
With a conventional loan, you can’t get pre-approved until after you find a home and submit an offer. With a VA loan, however, you can get pre-approved before you start shopping for a home. This will give you an idea of how much house you can afford and also show sellers that you’re serious about buying.
Additionally, there is no minimum or maximum loan amount. With a VA home loan, you can borrow as much—or as little—as you need to finance your home purchase or refinance. There are limits on how much you can borrow without making a down payment, but there is no set loan amount.
4. You can use your loan for more than just buying a home.
A VA loan can be used for more than just purchasing a home. It can also be used to build or renovate your home, buy a manufactured home, or refinance an existing loan. In addition to financing the purchase or refinancing of a home, you can also use your loan to make energy-efficient improvements or pay off certain types of debt.
5. There is NO down payment required.
We saved the best for last as this benefit keeps the most money in your pocket. One of the biggest benefits of getting a VA loan is that there is no down payment required. In most cases you can finance 100% of the purchase price of your new home. Even in situations where a down payment is required, it can be as low as 3% of the home’s purchase price.
Additionally, there is no monthly mortgage insurance with a VA home loan. This perk helps keep your monthly payments low. Down payments and mortgage insurance aren’t required with all types of loans, but they are typically required with conventional loans. With a VA home loan, you could save thousands of dollars up front and over the life of your entire loan.
Apply for VA Loans with Confidence
VA loans offer unique advantages for veterans and active-duty military members who are looking to purchase a new home or refinance. Such as no minimum credit score requirement and the option to get pre-approved before finding a home.
If you’re thinking about applying for a VA home loan, keep these five things in mind before getting started on the process.
- You'll need a Certificate of Eligibility.
- There is no minimum credit score required to apply, but a higher score may get you a better interest rate.
- You can get pre-approved for a loan before finding a home.
- You can use your loan for more than just buying a home.
- You don't have to make a down payment and may even qualify for additional discounts.
A VA Home Loan is an excellent lending option for active military and veterans alike. Now you can start the lending process with confidence–let Military Homespot Lending support your home buying needs. If you're thinking about applying for a VA Home Loan, keep these things in mind and talk to your lender today.