Buying A House With A VA Loan: A Complete Guide

Purchasing a home is one of the most exciting yet stressful undertakings in life. As a veteran, active-duty military member or surviving spouse, you have access to the VA home loan – a mortgage option that offers significant benefits to help make buying a house easier.

In this complete guide, we will walk through everything you need to know about using your VA loan benefit to purchase a home.

What Is A VA Loan?

A VA loan is a mortgage option provided by private lenders and backed by the Department of Veterans Affairs (VA). These home loans help eligible borrowers buy build, repair or refinance a home with little to no down payment.

VA loans offer military homebuyers advantages that are not found with conventional mortgages, including:

• No Down Payment VA loans require no down payment for first time and subsequent use This helps buyers purchase a home even if they lack funds for a 20% down payment

• No Mortgage Insurance Mortgage insurance protects the lender, not you. With a VA loan, you avoid private mortgage insurance (PMI) costs

• Lower Rates: VA loans often come with lower interest rates versus conventional loans, saving buyers money each month.

• Flexible Credit Guidelines: VA has more lenient credit standards than conventional loans. Minimum credit scores as low as 580 may qualify.

• No Prepayment Penalties: VA loans allow repaying the loan early without penalty fees.

• Closing Cost Assistance: The VA allows the seller to pay up to 4% of the home’s purchase price toward closing costs.

Am I Eligible For A VA Home Loan?

If you’re a veteran, active-duty service member, National Guard, Reservist or surviving spouse, you may be eligible for VA home loan benefits. General requirements include:

• Served minimum duty period (usually 90 days active duty)
• Received honorable or general under honorable conditions discharge
• Have sufficient income and credit score

Spouses may utilize VA home loans after the veteran’s death. The VA also has loans to help disabled veterans purchase accessible housing to accommodate their needs.

How Do I Get Approved For A VA Mortgage?

After confirming your eligibility, the next step is getting approved for financing. Lenders will evaluate these key factors:

Credit Score: Minimum scores between 580-620 qualify, but many lenders prefer 640+ for lower rates.

Income: Proof of stable income to repay the loan. Minimum ratios vary by lender.

VA Entitlement: First time users have full entitlement. Subsequent use depends on entitlement restored.

VA Funding Fee: Upfront fee financed into loan. Reduced for first time use and disabled veterans.

Downpayment: None required. Buyers may still opt to put 3-5% down to lower monthly payments.

Home Value: House must appraise at or above purchase price. Can exceed County VA Loan Limits.

As long as you meet VA guidelines, a lender can pre-approve you for an amount you qualify to borrow. This helps buyers compete with cash offers.

How Do I Shop For The Best VA Mortgage Lender?

With countless lending options, it pays to shop around for the best VA loan terms. Compare:

• Interest rates and fees
• Loan process and underwriting timelines
• Customer service and reviews
• Years in business and VA mortgage volume

Narrow options down to 3-5 lenders for quotes. Provide each the same loan scenario and property so terms are easily compared. This helps identify the best overall value.

Online lender marketplaces like Zillow simplify shopping multiple lenders at once. You can request quotes from participating VA lenders in minutes.

What Should I Look For In A VA Home?

As a VA buyer, you have flexibility in the type of home purchased: single family homes, townhomes, condos and more may qualify. Consider:

Location: Research commuting times, school districts, neighborhood safety and activities.

Schools: Homes zoned for top-rated schools often hold long term value.

Size: Ensure the home provides enough space and rooms to accommodate your needs.

Condition: VA loans allow older homes and fixer-uppers. Inspect thoroughly and budget for repairs.

Amenities: Must haves like yard space, garage, pool, etc. Consider future resale value too.

Commute: Check drive times to work/school during peak hours to avoid lengthy commutes.

While VA loans provide more flexibility, the property still must meet program appraisal and minimum property requirements to qualify.

Can I Buy A Foreclosure With A VA Loan?

VA helps buyers purchase foreclosed homes, also called VA REO (real estate owned) properties. These are homes previously foreclosed on VA loans and resold by the VA.

Benefits of buying a VA foreclosure include:

• Purchase at lower market value
• Negotiate repairs or closing cost assistance
• Listing agents specially trained to work with buyers
• Inspections still required to identify needed repairs

VA foreclosures are sold “as-is” and still require appraisal at purchase price. These homes often need repairs and renovations. If undertaking DIY repairs, ensure you budget properly.

What Are Closing Costs On A VA Home Purchase?

Closing costs include lender and title fees, taxes, insurance and more. A VA purchase may have 2-5% in closing costs. However, there are savings:

VA Funding Fee – Can be financed into loan instead of paying out of pocket. Reduced for first time buyers.

Seller Credits – Sellers can credit up to 4% of the purchase price toward closing costs.

Discounts – Many lenders offer discounts for buying down interest rates or using their title and escrow services. Ask!

Prepaids – Home insurance premiums, property taxes and HOA fees are often prepaid by several months at closing.

Prepurchase budget to ensure cash is available for closing. Shop around loan estimates to see where lenders offer the best rate and fee combination.

What Happens At Closing On A VA Home Purchase?

Closing signifies the completion of the home buying process. Typical events include:

• Final walkthrough of property to ensure in same condition as upon contract acceptance

• Signing all final VA loan documents and paperwork

• Paying closing fees and prepaid costs collected at closing

• Getting keys and garage remotes to property

Arrive early to review final VA loan documents. Ask for explanations on forms and fees unclear before signing. Upon completion, you’ll receive the keys and officially become a homeowner!

Home Buying Process With A VA Loan

Now that you have a broad overview of the VA loan process, let’s look at the typical buying timeline:

1. Get Pre-Approved – After confirming VA eligibility, get pre-approved by a lender. This accelerates the home search.

2. Shop For A Home – Once pre-approved, start searching for homes in your budget and desired neighborhood.

3. Make An Offer – When you find the perfect home, make an offer outlining price, contingencies, closing date and possession.

4. Negotiate Offer – Negotiate any counteroffers with the seller on price, repairs or closing costs until under contract.

5. Inspections – Have home thoroughly inspected to identify any repairs needed and understand maintenance costs.

6. Appraisal – The lender orders an appraisal to confirm the home value supports the loan amount.

7. Underwriting – Lender verifies all income and assets documented to formally approve your VA loan.

8. Closing Disclosure – A 5-day Closing Disclosure outlines all final VA loan costs. Lender clears you to close.

9. Closing Day – Review docs, sign VA loan papers, pay closing fees and get the keys!

Buyers have right to inspect and appraise the property. Ensure all repairs negotiated with seller are completed prior to closing.

Tips For A Seamless VA Home Purchase

Here are a few key tips to help you buy a home with a VA loan:

• Get pre-approved – Confirms qualification and loan amount allowed before shopping
• Know your budget – Factor in downpayment (if any), closing costs, monthly payment and maintenance
• Compare multiple lenders – Shop for the best rates, closing costs and fees to maximize savings
• Inspect thoroughly – Ensure VA minimum property standards are met and understand maintenance needs
• Review docs carefully – Understand what you are signing at closing and ask questions
• Plan ahead – Give yourself ample time to shop, get financing and close. Avoid rushing the process.

Purchasing a home is likely the largest investment you’ll make in your lifetime. Doing research, planning ahead and utilizing your VA benefits can help you navigate the buying process with greater ease and confidence.

Ready To Buy A House With A VA Loan?

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