Veterans nationwide can take advantage of the benefits offered through a Department of Veterans Affairs (VA) loan. In most cases, VA loans save home buyers money over the length of their loan. Service members enjoy benefits like avoiding a down payment, refinancing the entire value of a home or easier eligibility requirements for a mortgage.
One of the first steps in pursuing a VA loan is getting approved for a specific amount so you can begin house hunting (many lenders call this âpreapprovalâ). VA loan preapproval gives you an advantage when making an offer to buy a home so you and the seller can be confident in your offer.
Getting prequalified for a VA home loan online is a great way to start the homebuying process. As a veteran, active duty servicemember, or qualifying spouse, you’ve earned the right to take advantage of the VA home loan benefit. With a VA loan, you can buy a home with no down payment and avoid paying private mortgage insurance (PMI). But before you start shopping for your dream home, it’s important to get prequalified so you know how much home you can afford. In this article, I’ll walk you through the steps for prequalifying for a VA loan online.
What Does Prequalification Mean?
Prequalification is an initial screening process to see if you may qualify for a mortgage loan When you prequalify, the lender will ask for some basic information about your finances to give you a preliminary loan estimate This includes things like your income, assets, debts, and credit score.
The prequalification process doesn’t guarantee you’ll get a loan, but it helps you understand the loan amount and terms you may qualify for. Once you have an offer accepted on a home, you’ll go through the full underwriting process and provide documentation to verify all your financial information
Why Prequalify for a VA Loan?
Here are some key reasons why it’s a good idea to prequalify before starting your home search:
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Know Your Budget: Prequalification gives you a realistic price range so you can focus your home search on properties you can afford. This prevents you from wasting time looking at homes out of your reach.
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Competitive Edge: Sellers often prefer buyers who are prequalified or preapproved because it shows you’re a serious buyer who is ready to move quickly. Coming in with a prequalification letter makes your offer stronger.
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Lock In Rates: Interest rates fluctuate daily. By getting prequalified, you can usually lock in a rate for 30-60 days while you search for a home. This protects you from rates going up.
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Smooth Process: Prequalifying ahead of time makes the entire buying process smoother. You’ll have paperwork ready to submit for final underwriting.
Online Prequalification for a VA Loan
Thanks to technology, you can now prequalify for a mortgage completely online. Here are the steps to take:
1. Choose an Online Lender
The first step is to select an online mortgage lender to work with. Look for lenders that specialize in VA loans and have strong customer reviews. I recommend comparing a few lenders to find the best fit for your needs. Some top VA lenders include Veterans United, Navy Federal Credit Union, and New American Funding.
2. Gather Your Financial Documents
Before starting the online application, take some time to pull together all of your financial information. This includes things like:
- Pay stubs covering the last 30 days
- W-2s for the past 2 years
- Federal tax returns for the past 2 years
- Bank statements for the past 2 months
- Investment account statements
- Information on any real estate you own
- Debt information like credit card statements and auto loan details
- VA Certificate of Eligibility (if you have one)
Having these documents ready will allow you to enter accurate numbers and move through the prequalification process more quickly.
3. Fill Out the Online Application
Once you select a lender, you’ll fill out their online application to get prequalified. The application will ask for:
- Your personal information (name, date of birth, Social Security number, etc.)
- Current employment and income details
- Information on your financial assets and debts
- Details on any real estate or properties you own
- VA eligibility and service history
Take your time filling this out accurately. Even small errors can negatively impact your prequalification.
4. E-Sign Disclosures & Authorize Credit Check
As part of the online process, you’ll need to electronically sign disclosures that the lender is required to provide. This explains how they will use your information. You’ll also need to authorize them to pull your credit report. The credit check allows the lender to review your credit history and score to determine your loan options.
After you complete these steps, the lender will review your application and issue a prequalification letter within a few minutes to 24 hours.
5. Review Your Prequalification Details
Carefully review the prequalification letter to understand the loan amount, estimated rates and fees, and any conditions. Ask the lender to clarify anything you don’t understand. Make sure the loan terms fit your budget and goals.
Some key details to review:
- Loan amount: How much home you can afford.
- Interest rate: The rate you may qualify for based on your credit.
- Monthly payment: The estimated principal, interest, taxes, and insurance.
- Loan-to-value ratio: How much of the purchase price the loan covers.
- Cash needed to close: Funds needed for your down payment and closing costs.
What Happens After Prequalification?
Prequalification is just the first step. Here’s what happens next:
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Shop For Homes: Use your preapproval letter as you start looking for homes within your budget. Narrow your search to properties you can afford.
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Make an Offer: When you find the right home, make an offer and submit your prequalification letter with the offer to show you are a serious buyer.
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Get Preapproved: As you negotiate a purchase agreement, start the preapproval process by providing full documentation to verify your finances. This is your final loan approval.
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Home Inspection: After accepting an offer, order a home inspection to evaluate the condition of the property.
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Appraisal: The lender will order an appraisal to confirm the home is worth the purchase price.
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Loan Finalization: Provide any remaining documentation for underwriting. Once approved, you’ll finalize the loan and prepare for closing!
Bottom Line
Prequalifying online for a VA home loan is the best way to jump start your home buying process. Understanding your budget and loan options helps you search for homes in your price range and make competitive offers. I recommend taking some time to prequalify with multiple VA lenders before you fall in love with a home. This sets you up for success through every step of the financing process.
Evaluate Your Finances
The home buying process is a big step, especially for first-time home buyers. VA loans offer an amazing opportunity for service members to get a loan with no down payment. However, you still need to meet the VA loanâs financial requirements and a strong financial position helps your chances of approval.
Consider pulling your credit report and taking steps to increase your credit score. Youâll also want to look at your outstanding debts and pay down any credit cards or other loans if possible. This help positively impacts your DTI. Anything you can do to improve your financial standing can help increase the chances of getting initial approval.
See What You Qualify For
Once you determine your eligibility for a VA loan, the next step to getting mortgage approval is making sure your finances are ready for a mortgage. This is where mortgage lenders come into the picture. Youâll need to get prequalified or preapproved to present a strong offer to sellers and their agents.
Letâs take a quick look at these two types of qualifications.
During a prequalification, mortgage lenders pull your credit score to get a look at your median FICOâ Score and any outstanding debts. They also ask for verbal or written estimates of income and any assets you want to use to qualify for the mortgage. This allows lenders to get your debt-to-income ratio (DTI) to help you estimate the maximum loan amount you can afford.
The key here is that, because your income and assets arenât verified, this is just an estimate. A preapproval is a stronger indicator of your current situation because lenders verify more of your financial details.
During a preapproval, mortgage lenders look more closely at your income, debt and other indicators of your ability to repay your mortgage loan. Letâs take a look at some of the steps lenders will take and the documents they will ask for during the preapproval process.
- Lenders will run a hard credit check to fully understand your current debt load.
- Lenders will ask for a statement of service (for active duty only) from your commanding officer to verify your income.
- Lenders will need verification of employment, W-2s and pay stubs.
- Lenders will want to see verification of assets including bank statements, retirement accounts or proof of other assets.
- Lenders will also need to verify your identity using your driverâs license and Social Security number.
How Can I Get Pre-Qualified?
FAQ
Can you prequalify for a VA loan?
How long does it take to get pre-approved for a VA home loan?
What is the minimum credit score you need for a VA loan?
What will cause VA loan to get disapproved?
Can I get a certificate of eligibility for a VA home loan?
We offer VA home loan programs to help you buy, build, or improve a home or refinance your current home loan—including a VA direct loan and 3 VA-backed loans. Find out if you can get a Certificate of Eligibility (COE) to show your lender that you qualify for a VA direct or VA-backed home loan based on your service history and duty status.
What are the eligibility requirements for a VA home loan?
The home must be for your own personal occupancy. The eligibility requirements to obtain a COE are listed below for Servicemembers and Veterans, spouses, and other eligible beneficiaries. VA home loans can be used to: * 90 days applies for wartime If you are now on active duty, eligibility can be established after 90 days of continuous active duty.
What if I Have Questions about my eligibility for a VA home loan?
If you have any questions about your eligibility for a VA home loan, please call your VA regional loan center at 877-827-3702 ( TTY: 711 ). We’re here Monday through Friday, 8:00 a.m. to 6:00 p.m. ET. Learn about VA home loan eligibility requirements for a VA direct or VA-backed loan.
Why do I need a VA loan preapproval?
Loan preapproval also gives you the confidence and clarity to start seriously shopping for your home. Sellers and their agents will be looking for this. If you have any questions or would like to start your own VA preapproval, please reach out to one of our Veterans United VA Loan Experts at 1-800-884-5560.