How to Pre Qualify for a VA Home Loan in 7 Simple Steps

Getting pre qualified for a VA home loan is one of the first steps to take when you want to buy a house using your VA home loan benefit, Pre qualifying gives you an estimate of how much you may be able to borrow and helps ensure you meet basic VA loan requirements before you start seriously looking at homes

While pre qualification isn’t a firm mortgage approval, it’s an important part of the homebuying process that can save you time and headache down the road. Here’s a step-by-step guide to pre qualifying for a VA mortgage:

1. Make Sure You’re Eligible for a VA Home Loan

Not everyone can get a VA home loan. These mortgages are a benefit reserved for active duty servicemembers, veterans, reservists, and eligible surviving spouses.

To qualify you typically need to have served at least 90 days of active duty service, though the exact requirements depend on when you served

• For post 9/11 service, you need at least 90 days of active duty service

• For service between the Vietnam and Gulf War eras, you typically need at least 181 days of active duty service.

• For WWII, Korean War, and Vietnam era service, you need at least 90 days of active duty service.

There are some exceptions if you were discharged early due to injury or hardship. You can check your eligibility status and request a Certificate of Eligibility (COE) on the VA website.

2. Check Your Credit Score

Your credit score is one of the main factors lenders use to determine if they’ll approve you for a mortgage. Most lenders require a minimum credit score between 580-640 for a VA loan, though some may go higher.

Before pre qualifying, it’s a good idea to check your credit report and FICO score so you know where you stand. You can get free copies of your credit reports from AnnualCreditReport.com.

If your score is below 580, you may need to spend some time improving it before trying to pre qualify. Paying down balances, correcting errors, and not taking on new debt can help boost your score.

3. Gather Key Financial Documents

When you apply for pre qualification, the lender will ask about your income, assets, debts, and other finances to estimate how much you can borrow.

Having the following documents ready can make the process faster:

• W-2s or tax returns for the last 2 years
• Pay stubs covering the last 30 days
• Bank statements for checking, savings, retirement, and investment accounts
• Documentation for any other income like VA disability or child support

Also gather paperwork for any debts like credit card statements, auto loans, student loans, and child support orders.

4. Research Mortgage Rates and Shop Lenders

VA mortgages can be obtained from hundreds of different lenders. Rates and fees can vary, so it pays to shop around.

Online mortgage comparison sites let you see multiple lender quotes after just one pre qualification request. You can also reach out to local banks, credit unions, and mortgage brokers.

Focus on identifying lenders that specialize in VA loans. Ask about origination fees, closing costs, and any lender credits that can help lower your upfront costs.

5. Apply for Pre Qualification

Once you’ve identified a few lenders, it’s time to apply for pre qualification. Many lenders let you start the process online or over the phone. You’ll provide details on:

• Your desired purchase price or loan amount
• Income from employment, disability, retirement, etc.
• Account balances for assets like checking, savings, retirement, etc.
• Monthly debt payments like credit cards, auto, student loans, child support, etc.

The lender will pull your credit report and review your income and debts. Within usually 15-30 minutes, you’ll get a pre qualification letter estimating the loan amount you may qualify for.

6. Compare Multiple Pre Qualification Letters

Ideally, you should get pre qualified with 3-4 different lenders. Compare their pre qual letters to see which lender can offer the best deal based on:

• The loan amount. A higher pre qualification amount gives you more buying power.
• Rates and fees. Lower is better, obviously!
• Loan program terms like occupancy requirements.

Evaluate not just the bottom line numbers but the overall experience. Did the lender explain the process? Do they have strong customer satisfaction ratings?

7. Proceed to the Pre Approval Stage

Once you have a pre qualification letter from your top lender choice, it’s time to take the next step and get a full pre approval.

Pre approvals require full documentation of your finances including pay stubs, bank statements, and tax returns. The lender will verify your employment and assets.

Although more rigorous than pre qualification, pre approval is still not a final mortgage guarantee. But it shows sellers you are a serious buyer and can help give you a competitive edge in making offers.

The pre approval letter states the exact loan amount, rate, and terms you are eligible for based on full underwriting. Now you can start seriously shopping for your dream home knowing exactly what you can afford!

Pre Qualification vs. Pre Approval for VA Loans

Pre qualification and pre approval are often used interchangeably, but they are distinct steps in the mortgage process:

VA Loan Pre Qualification

• Based on limited verbal information you provide
• Soft credit check only
• No verification of income or assets
• Gives estimated loan amount
• Takes 15-30 minutes
• Not a commitment to lend

VA Loan Pre Approval

• Requires documentation of income, assets, credit, etc.
• Hard credit check
• Employment and assets verified
• Underwriting review
• Gives firm approval up to specified amount
• Can take several days
• Much stronger than just pre qualification

While pre qualification is simpler, pre approval provides peace of mind that your financing is lined up. Many experts recommend having a pre approval letter before you start putting in offers.

When to Pre Qualify for a VA Mortgage

You can pre qualify for a VA loan up to 6 months before you plan to start home shopping. Just be aware you’ll need to re-check your status closer to your target purchase timeframe in case anything changes.

As a rule of thumb, aim to pre qualify approximately 2-3 months before you want to begin making offers. This gives you time to shop around and compare multiple lenders.

If you’re not quite ready to buy, you can still talk to a lender and go through preliminary pre qualification to get an idea of your home loan potential. Some other good times to pre qualify:

• When you start thinking about buying a home within the next 6-12 months.

• Before you start seriously looking at homes and attending open houses.

• When you find a home you like and want to make an offer contingent on financing.

• If you previously pre qualified but it’s been 3-6 months. Time to check in again!

How Can a Realtor Help Pre Qualify for a VA Loan?

Working with an experienced real estate agent can streamline the pre qualification process. A good realtor will:

• Explain the pre qual process and documentation needed
• Connect you with lenders familiar with VA loans
• Advise you on a home price range to shop in
• Review pre qual letters and help you compare offers
• Assist with pre approval andfulfilling lender conditions

The agent’s job is to set you up for success in your home search. Making sure you get properly pre qualified is a key first step. Many realtors have preferred VA lenders they trust to work with.

What Happens After You Pre Qualify for a VA Mortgage?

Pre qualification gives the initial estimate of your VA loan potential. After that comes:

Pre Approval – Provides a firm approval with verified income/assets. You’ll receive a pre approval letter stating the exact loan amount, rate, fees, etc.

Shopping – With pre approval secured, now you can confidently start submitting purchase offers within your approved loan amount.

Underwriting – The final approval happens once the lender fully underwrites your loan just prior to closing. Provided you’ve satisfied all requirements, you’ll get the clear to close on your new home!

Pre qualification and pre approval lay the groundwork to make the rest of the homebuying journey smoother. You’ll know what price range to shop in and have assurance that your financing is solid.

Mistakes to Avoid When Pre Qualifying

To ensure the pre qual process goes smoothly, watch out for these common missteps:

• Not checking your credit before applying. Know your score first so there are no surprises!
• Providing inaccurate income or debt information that skews your estimated loan amount.
• Forgetting to disclose large debts that can affect your DTI like alimony or student loans.
• Neglecting to shop different lenders to compare rates and fees.
• Skipping pre approval once you’ve found a home you want to buy.

Avoiding these pitfalls will lead to a better experience as you get set to buy with a VA loan.