Getting preapproved for a VA loan is one of the most important steps for servicemembers and veterans looking to buy a home using their VA home loan benefit. Preapproval provides proof of your eligibility and purchasing power when making an offer on a property. This guide will walk you through everything you need to know to get preapproved for a VA mortgage.
What is Preapproval for a VA Loan?
Preapproval is essentially a preliminary approval of your eligibility for a VA home loan from a mortgage lender. The lender reviews your credit, income, debt, and service history to determine the maximum mortgage amount you qualify for.
Once preapproved, you’ll receive a preapproval letter that states the maximum purchase price and loan amount you’ve been approved to borrow. This letter can be presented with your offer to demonstrate that you are a qualified serious buyer.
Preapproval does not guarantee final loan approval or a specific interest rate But it does indicate you’ve undergone initial underwriting and are likely able to obtain financing within a certain loan amount range.
Why Get Preapproved for a VA Loan?
There are a few key reasons it’s important to get preapproved before house hunting with a VA loan:
-
Gives you a price range Preapproval lets you know the maximum home purchase price and loan amount you can afford This allows you to narrow your home search to a realistic price range
-
Shows sellers you’re serious: Presenting a preapproval letter with your offer indicates to sellers that you’re a financially qualified buyer who is likely to secure financing. This can make your offer more appealing.
-
Speeds up the process: Preapproval starts the documentation and underwriting process early. This allows for a smoother closing once you’re under contract.
-
Locks in rates: Many lenders allow you to lock in an interest rate with your preapproval. This secures the rate even if rates rise later.
-
Peace of mind: Going through preapproval gives you confidence that you’re financially ready to buy with a VA loan before you start house hunting.
In today’s competitive housing market, most home sellers expect buyers to be preapproved. So it’s best to take this important step upfront in the VA loan process.
VA Loan Preapproval Process
Here is an overview of what to expect during the preapproval process for a VA mortgage:
Step 1: Apply
The first step is to submit a VA loan preapproval application with a mortgage lender. This can be done:
- Online
- Over the phone
- In person at a branch location
Be prepared to provide information on your income, assets, debts, credit, property/address history, and military background.
Step 2: Document Verification
After starting your application, your loan officer will request documents to verify the details you provided. This typically includes:
- W-2s from the last 2 years
- Recent pay stubs
- Last 2 months of bank statements
- Certificate of Eligibility (COE) or DD-214 discharge papers
- VA disability award letters, if applicable
- Other income/asset documents
Your lender may allow you to upload documents directly through an online portal for convenience. Provide requested paperwork promptly to help speed things along.
Step 3: Underwriting Review
Next, underwriters will review your credit report, documents, and financial details to assess your eligibility according to VA guidelines. Key factors evaluated include:
- Income/employment
- Assets/reserves
- Debt-to-income ratio
- Credit history
You may have to provide clarification or additional documents if any items need further validation. Communicate closely with your loan officer during this stage.
Step 4: Get Preapproval Letter
Once underwriting approves your application, you’ll receive a preapproval letter stating the maximum mortgage amount and purchase price you qualify for. Rates are subject to change until you have an accepted purchase contract.
Now you can start house hunting within your approved budget, knowing lenders have confirmed your VA loan eligibility. Your preapproval is typically valid for 60-90 days.
Tips for Getting Preapproved for a VA Mortgage
Follow these tips to help make the preapproval process go smoothly:
-
Shop lenders: Compare quotes from 3+ lenders to find the best VA loan fit for your situation. Look for great customer service and competitive rates.
-
Get organized: Gather required financial documents in advance to submit promptly during preapproval.
-
Check your credit: Review your credit reports and scores from all 3 bureaus before applying. Correct any errors.
-
Pay down debt: Consider paying down balances before applying to improve your debt-to-income ratio.
-
Lower utilization: Keep credit card balances low prior to applying. High balances can negatively impact your credit scores.
-
Explain red flags: If you have credit blemishes or a recent job change, be prepared to provide context to underwriters.
-
Ask questions: Don’t hesitate to ask your loan officer questions to clarify any points about your preapproval.
Starting the preapproval process early and working closely with your lender sets you up for success with your VA home loan. Within a few weeks or less, you can have a preapproval letter in hand ready to start shopping for your dream home.
Documents Needed for VA Loan Preapproval
As part of the application and underwriting process, you’ll need to provide documents that verify critical information you provided on your application.
Here are some of the key documents lenders typically require:
Identification:
- Driver’s license or state ID
- Social Security card
- Passport or permanent resident card if applicable
Income/employment:
- W-2s for the last 2 years
- Recent pay stubs covering 1 month
- Federal tax returns for last 2 years
- Documentation for any supplemental income
Military service:
- DD-214 discharge paperwork
- Statement of service for active duty members
- VA Certificate of Eligibility
Assets:
- Last 2 months of bank statements
- Documentation for any other assets—stocks, bonds, retirement accounts, etc.
Liabilities:
- Account statements showing minimum payments for all debts
Be sure to request an updated list of required documents from your lender. Having everything ready ahead of time prevents delays in underwriting.
How Long Does Preapproval Take for a VA Home Loan?
The preapproval timeline can vary depending on factors like your documentation preparedness, your lender’s processes, and how quickly underwriters review your application.
Here is an estimated VA preapproval timeline:
- 24-48 hours: Submit application and provide initial documents
- 1 week: Lender verifies documents and requests any missing items
- 1-2 weeks: Underwriting reviews file and addresses any concerns
- 1 week: Final underwriting approval and issuance of preapproval letter
So in as little as 2-3 weeks, you could have your preapproval letter in hand. Completing your paperwork accurately and quickly at every stage helps shorten the preapproval period.
Communicating closely with your loan officer also ensures you get answers to any questions promptly during the process.
Can I Get Preapproved with a VA Loan with Bad Credit?
Yes, VA loans are available to borrowers across a wide range of credit scores. Minimum credit score requirements for VA loans typically start around 580. So it’s possible to qualify even with less-than-perfect credit.
That said, lower credit scores can reduce the loan amount you may qualify for. Issues like high balances, late payments, and collection accounts can negatively impact your approval odds and interest rate.
If your credit score is on the lower end, be prepared to explain past credit issues to underwriters. Providing context can help ease concerns.
Also consider taking steps to improve your credit before applying, like lowering card balances or resolving errors. This may help boost your approval chances and loan terms.
Alternatives if You Don’t Qualify for VA Preapproval
If you apply for VA loan preapproval but don’t ultimately qualify, you have a few options:
Improve your credit: Take time to build your credit by lowering debt balances, correcting errors on your reports, or establishing positive payment history. Then reapply after a few months.
Use VA as a co-borrower: Adding a co-borrower like a spouse with better credit can help you qualify if you lack sufficient income or have limited credit history on your own.
Leverage other programs: Explore other homebuyer programs like FHA, USDA, or state/local down payment assistance options if available in your area.
Rent instead: Consider renting for a year or more to save up a larger down payment and allow time to boost your credit profile.
Consult a credit repair company: Credit repair services specialize in identifying and challenging credit report errors and items like collections that can be removed. Their efforts may help improve your lending profile for reapplying down the road.
Discuss alternatives that fit your scenario with both a lender and real estate agent. With a bit of time or strategy adjustments, you can hopefully still achieve your homeownership goals.
Preapproval Doesn’t
Can you prequalify for a VA loan?
Yes, prequalification is the initial step in the VA loan process and is generally quite simple. It provides an estimate of how much you might be able to borrow based on the information you provide to the lender.
You can think about loan prequalification as a “first interview” of sorts. Prequalification helps lenders achieve three main goals:
- Assess a borrower’s service and credit eligibility
- Estimate the loan amount a borrower may obtain
- Begin gathering documentation needed for preapproval and loan underwriting
The prequalification process also holds key benefits for prospective borrowers. It’s a non-binding step you can take with multiple lenders, which will help you compare rates and terms. It’s typically a 10-minute conversation.
With your permission, lenders conduct what’s known as a “hard inquiry” to obtain your current credit scores. A hard credit inquiry can ding your credit score, although it’s typically only a few points, if any. When you’re shopping for a mortgage, the credit bureaus won’t count every hard inquiry against you. Instead, they’ll typically consider all lender inquiries within a 45-day period as one single check, which minimizes any harm to your credit and allows you to comparison shop.
The VA doesn’t have a built-in credit score to qualify for this program. But it’s important to remember the VA doesn’t make home loans. Instead, it basically provides a form of insurance on behalf of qualified borrowers. It’s ultimately up to lenders, like Veterans United, to decide whether to make a home loan.
Because lenders take on most of the risk with each loan, they’re allowed to introduce requirements and standards that go beyond what the VA wants to see. You’ll often hear these additional requirements called “overlays.” A credit score cutoff is among the most common.
Different lenders can have different credit score requirements. You may also need a higher score if you’ve experienced a recent bankruptcy or foreclosure or if you’re seeking a jumbo loan. Generally, a 620 FICO score is a pretty good barometer for VA lenders.
In addition, any co-borrowers on the loan would also need to meet the lender’s credit score requirement.
If you’re purchasing in one of the nation’s nine community property states, lenders can consider your spouse’s credit and debts even if he or she won’t be on the loan.
Answer a few questions below to speak with a specialist about what your military service has earned you.
Along with checking your credit, lenders will also seek to learn more about your employment, your income and your overall financial and homebuying goals.
Different lenders may take different approaches to the prequalification conversation. But it’s common for loan originators to ask you about:
- Your desired loan amount
- Your current and previous employment
- Your gross (pre-tax) monthly income
- Your assets, like bank accounts and retirement funds
- Your monthly liabilities (day-care costs, child support, alimony, etc.)
- Any previous bankruptcies, foreclosures or judgments
- Any delinquencies or defaults on federal debts
- Whether you’ve recently owned a home
Lenders will also get a good look at your major monthly debts from your credit report. They’ll use those and the income information you provide to calculate an initial debt-to-income (DTI) ratio. For VA loans, this key mortgage industry metric looks at your monthly debts in relation to your overall monthly income.
They’ll calculate this figure based in part on the loan amount you’re seeking. And that means flexibility can be important for prospective borrowers whose DTI ratio is on the edge. Depending on the lender’s requirements and your unique situation, you may need to seek a lower loan amount to get a workable DTI ratio.
The VA typically wants to see a DTI ratio of 41 percent or less. But it’s possible to go above that and still secure financing. Lenders will usually have their own maximum allowable DTI ratio. Low credit and high DTI ratio are two of the most common reasons why some prospective buyers are unable to get prequalified.
If Your Credit Scores Fall Short
So, what happens if you don’t meet a lender’s credit score cutoff? While some lenders may allow for compensating factors, others might simply send you packing if you fail to meet their credit score requirements. Veterans United takes a different approach.
We created an entire department dedicated to helping service members, Veterans and military families improve their credit and get on the path to loan prequalification.
If were not able to prequalify borrowers, they have the opportunity to work with the credit experts in our Lighthouse Program®.
Our Lighthouse Program® consultants:
- Identify and help you correct errors on your credit report
- Establish a plan to strengthen your overall financial profile
- Develop personalized objectives to reduce debt
This is a free service open only to Veterans, service members and military families. The Lighthouse Program® has helped more than 30,000 Veterans and service members overcome their credit challenges and go on to close on a home loan.
By going through prequalification, buyers can identify and start working on potential financing or VA eligibility roadblocks. Does your credit score fall a bit short? Is your income likely to be a problem?
Prequalification is the time to isolate and start addressing these issues. Once you’ve been prequalified for a VA home loan, the next step is loan preapproval.
About Our Editorial Process
Veterans United is recognized as the leading VA lender in the nation, unmatched in our specialization and expertise in VA loans. Our strict adherence to accuracy and the highest editorial standards guarantees our information is based on thoroughly vetted, unbiased research. Committed to excellence, we offer guidance to our nations Veterans, ensuring their homebuying experience is informed, seamless and secured with integrity.
How to Get Pre Approved for a VA Loan: Best VA Loan Lender to Buy a House – What You Must Know
FAQ
Is it hard to get VA loan approved?
What will cause VA loan to get disapproved?
How long do you have to wait to apply for a VA loan?
How do I start a VA loan preapproval?
When you’re ready to start your VA loan preapproval, contact an approved VA home loan lender to begin the process. Top VA loan lenders can confirm your VA loan eligibility by pulling your Certificate of Eligibility through the VA’s automated system.
Should I get preapproved for a VA loan?
Getting preapproved for a VA loan is a foundational first step. Preapproval is the initial green light from your mortgage lender and gives you a clear sense of your purchasing power. Preapproval also adds weight to any offer you place on a home. In today’s real estate environment, home sellers expect to see offers from preapproved buyers.
Do I need a preapproval letter for a VA home loan?
Getting preapproved for a VA home loan before seriously shopping for a house is crucial. Having a preapproval letter in hand from a top VA loan lender offers two advantages: In a competitive homebuying market, having the backing of a lender preapproval letter can make the difference between getting under contract or having your offer declined.
How long does a VA loan preapproval take?
VA loan lenders can often preapprove you for a VA loan within a few days of submission if you have all the necessary documentation. Of course, if this isn’t the case, your lender can give you a checklist of what they need to issue your preapproval. What’s the difference between preapproval and prequalification?