Breaking Down the VA Loan: How to Apply for Yours

Applying for your VA loan is quite easy, but before you do, you should know about the benefits and eligibility guidelines outlined in the sections below. Then, we will walk you through the steps to apply for your VA Home loan, including all the documentation you will need, how to choose your lender, and how to choose your real estate agent. The process may seem complicated, but don’t worry. Based on the 2022 updates, this article contains everything you’ll need to know in order to apply.

What are the Benefits of a VA Loan?

Supported by the Department of Veteran Affairs, VA Home loans are one of the many perks for past and present members of the military community. They help veterans and active servicemembers buy a house or refinance an existing loan. As a lifetime benefit, these loans can be used multiple times depending on the loans’ sizes and the location of the homes bought.

VA Home loans require no down payment or Private Mortgage Insurance for the entire life of the loan. These loans also offer low interest rates, low closing costs when buying a house, and no penalty fee for paying off the loan earlier than expected.

First-time recipients also have no limits to the size of the loan they receive.

Another valuable benefit is called a VA loan guarantee. That means that the federal government promises to repay your lender part of the loan in the cases of default and foreclosure. The amount of money the government promised to repay is called your entitlement. Its size determines the size of the loan you can receive. For returning loan recipients, you may be able to redeem your entitlement. If so, your second loan may also come without a loan limit depending on your financial history.

Unlike other home loans, you could still secure a VA Home loan even if you have experienced a prior bankruptcy or foreclosure.

Unlike other home loans, you could still secure a VA Home loan even if you have experienced a prior bankruptcy or foreclosure.

Who is Eligible for a VA loan?

A lot of the military community can apply for VA Home loans. Active service members, veterans, and National Guard and Reserve members may be eligible in addition to certain spouses and those affiliated with specific military organizations. For all veterans and active service members, you must meet the specific service requirements. These requirements include specific lengths of service depending on when you served and your character of service among other things.

The VA will also require you to live in the house you buy with your loan, and they expect you to have enough money to pay for the VA appraisal and closing costs of buying your home. While the closing costs vary, they usually do not exceed 1% of the purchase price of your home.

How to Apply for Your VA Loan

Applying for your VA Home loan can seem a bit complicated, but don’t worry. The following sections break down each step in the process. To start, you will need to complete two important documents (the Certificate of Eligibility and Proof of Service), possibly more depending on your situation. Once your eligibility is confirmed, you will then choose your lender and real estate agent. We strongly recommend comparing lenders to find the one that works the best for you. Also, be sure to carefully review all contracts and agreements before signing to ensure you know what fees and rates your lender will charge.

1. Documents You Need

To apply for your VA loan, you will first need to fill out and submit several important documents including your Certificate of Eligibility and your Proof of Service These documents will prove your eligibility for the loan and will help you determine how much money you can get.

Certificate of Eligibility (COE)

The most important document for your VA Home loan is your Certificate of Eligibility (COE). The COE is a formal recognition by the Department of Veteran Affairs that you are eligible for a VA loan. You can apply by logging in or creating a new account with the VA online or by mailing in this form. If you want to mail it, you simply need to print it, fill it out, and mail it to your regional VA offices as the form’s last page indicates.

If your COE is denied for whatever reason, don’t worry; you still may be eligible. You can reapply by adding new evidence to support your claim of eligibility or ask for a Higher-Level Review of the evidence you first submitted. You can also directly appeal to the Board of the VA, but, if you do this, you cannot use the first two options mentioned.

Proof of Service

To prove your military service meets the VA’s service requirements, you must access your military records. You can request access online or mail a Request Pertaining to Military Records to the address indicated on the back of the form. You will need to provide your full name, the last four digits of your social security number, your entry data, your duration of lost time, and the name of the command who provided this information to you.

Applying for a VA loan as an Eligible Spouse

Overall, applying for a VA Home loan as a spouse is very similar to applying as a veteran or active service member. You will still need your servicemember’s service records and a COE. There are two ways to complete a COE as an eligible spouse, depending on whether you receive Dependency and Indemnity Compensation (DIC) benefits.

If you are receiving DIC benefits, you can fill out this eligibility form. You will also need your Veteran’s separation papers like their DD214 that can be accessed online. These records can either be mailed to your regional VA office or sent to your lender to process them online.
If you are not receiving DIC benefits, you will need to complete this VA Form. Then, you’ll need the Veteran’s separation papers if they are available, a copy of your marriage license, and the death certificate of your veteran. Once you have all of these documents, send them to one of the three regional VA pension management centers.

Once these eligibility documents have been approved, you will want to verify with the VA itself that no other documents will be required for your situation. And with that, you’re almost done applying for your VA loan.

2. Choose Your Lender

Once your COE and proof of service have been approved by the VA, congratulations! Your application for a VA loan is complete, and you can take the next step in your homebuying journey.

Now, you can start looking for a lender. Your lender could be a bank, credit union, or mortgage company, and they will provide you with the actual money you get through your VA loan. You may want to look at several different lenders, so you can compare their rates, fees, and closing costs.

Just be aware: while the VA does not require a down payment, some lenders may require a small down payment. They may also ask for additional documents like a credit report, documentation of existing debts, proof of income with minimum employment of 2 years, and/or a Uniform Residential Loan Application (URLA) among other things. The documents required by lenders vary, so be sure to check all the details of their offers before signing with one.

3. Choose Your Real Estate Agent

Once you have chosen your lender, you can now pick a real estate agent. Your real estate agent will help you through the buying or selling process and will give you all the information you need, especially about the local housing market and applying for VA loans. They will also bid on houses and negotiate on your behalf. Using their good connections with reputable home inspection and appraisal professionals, agents can often organize both highly recommended services. Your agent will also explain all the documents and paperwork required throughout the homebuying process.

Interested in Nashville or Clarksville, Tennessee?

Sapphire Team’s Realtors may be the perfect real estate team to work with you. As successful professionals with many connections in the Nashville area, we will work with you to get your dream home. We specialize in buying and selling residential properties as well as developing ground-up Urban Infill in Davidson County core. These options will work perfectly with your VA loan which allows you to buy or build your home. For more information about the Sapphire Team click here, or to contact us click here.

What’s Next?

And that’s it! Now that you’ve applied for your VA loan and chosen your lender and real estate agent, you can shop for your dream home!

Frequently Asked Questions

How much money can I get from a VA loan?

What do I need to know before applying for a VA loan?