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How To Get a VA Loan (in Seven Easy Steps)

Seven Minute Read

Written by Ed Andrews III on July 27th, 2020

If you’re a veteran that wants to buy a home, but doesn’t know where to start or anything about the VA loan process….stick with me. I’m going to go through the entire loan process so you know exactly what to expect.

Step One: Get Pre-Qualified

So the first step for any veteran wanting to use their benefits is to get pre-qualified. The pre-qualification process is really easy. You’ll contact a lender and give them some basic information about your income and assets, as well as allow them to pull your credit report.

From there they should be able to tell you whether or not you’re likely to qualify for financing. Although being pre-qualified is sufficient to submit offers on properties, it’s far better to be pre-approved.

For more about the difference between pre-qualifications and pre-approvals, check out my video about the difference between the two that breaks that down in detail.

Step Two: Find a House

Once you’re pre-qualified (or pre-approved) you’ll be ready to go shopping. Your real estate agent will help you find homes that meet your needs. For more details on weighing your housing needs vs wants, please check the description below for a link to my video on that specific topic.

Once you find the home you like, your agent will submit your offer price for that property by completing a purchase contract reflecting your desired parameters. If your offer and contract is accepted, it’ll be time to submit your official mortgage application for that property.

Submitting an official mortgage application will require sending the appropriate documentation to your loan officer. The typical income and asset documents include things like paystubs, W2s, tax returns, bank statements, investment account statements, etc.

You’ll send these to your loan officer so they can put your mortgage application package together. Once complete they will send it off (electronically) to their processing and underwriting team.

Step Three: Inspections, Appraisals, and Insurance

The next task for you will be to pay for your home inspection, appraisal, and start shopping for homeowners insurance. You may want to wait until after you get your home inspection to submit payment for your appraisal. Once you pay for your appraisal your lender will officially order it, and an appraiser should be out to visit the property within a week or so.

If you have an experienced loan officer, they should have contacts in the insurance industry. I always reach out to my contacts and get insurance quotes on my clients behalf. For more information on how to shop for insurance please check the description for a link to my video on that specific topic.

Once you decide which insurance company and policy you want to go with, you’ll need to get that to your loan officer right away. There’s some specific information your insurance company will need from the lender before finalizing the policy.

Step Four: And Now We Wait....

After step three you won’t have much to do as far as your mortgage application for at least a week or two. It will be working through the lenders initial underwriting process. Think of underwriters not so much as deciding whether or not you’ll get the loan, but rather just verifying the information your loan officer put in the system.

Most loan applications go through an automated underwriting process. The loan officer is the one who runs the automated underwriting system prior to giving you a pre-qualification letter.

So a large function of underwriting is insuring that the documents you provide regarding your income and assets match up to what is listed in the system.

Step Five: Clearing Conditions

If there’s any ambiguities or items that require further clarification after the underwriting review, you will likely be required to supply additional documentation to clarify those. These are commonly referred to as “conditions”.

When your loan comes out of underwriting you are generally issued a “conditional approval”. In other words, the loan is approved but it is contingent on you supplying the additional information that has been requested. It is important that you get these items back to your loan officer as soon as possible.

If you’re making them wait longer than 48 hours to get documents back from you, that delay could come back to bite you later. Once the documents are received from you, they have to send your loan back to underwriting to sign off on those items. This review of your loan generally doesn’t happen immediately, as there’s likely other loans ahead of yours that also need to be reviewed.

Around the time that your loan is coming out of underwriting for the first time, you should be getting your appraisal back. The appraisal helps the lender determine if the home is worth the amount you’ve agreed to pay for it.

If the value listed on the appraisal is lower than the agreed upon purchase price, you and your realtor may need to renegotiate the deal. For more information on how appraisals can impact your financing, be sure to watch my video “what if your appraisal comes back low”.

Step Six: Cleared to Close

Once your appraisal is back, insurance is in, and all conditions have been provided your loan will go back to underwriting for final approval. A loan that has received it’s final approval is considered “cleared to close”.

Once you are cleared to close (sometimes a few days before) you will receive your final closing disclosure. This document will show you the final figures and exactly how much money you’ll need at closing down to the penny.

The loan estimates you receive before then reflecting all fees and costs are in fact estimates. The closing disclosure will provide clarity on the exact figures for closing. You’ll have to sign your closing disclosure at least three days prior to closing. During this time your lender will also be working with the title company to send them the actual closing documents that you’ll be signing.

Most title companies have a limit on how large of a personal check you can write at closing. This cap typically ranges from $500-$1,500. So if the amount you’ll need for closing exceeds that amount, you’ll need to get a certified check or have your bank wire the money to title.

Step Seven: Closing

The next step is the most exciting in the process. It’s time to head to the title company for closing. At closing you’ll sign your name more times than you ever have in your life. Once you and the seller have signed all the appropriate documents, the title company will send them back to the lender for review.

Once the lender finishes reviewing them to ensure all documents have been completed fully and correctly, they will give the title company authorization to disburse the funds provided by the mortgage loan you’ve just taken out. This process is called “funding”. Once your loan is officially funded, you will receive the keys to the property.

There are a handful of lenders that will table fund their loans. This means that they send the funds with the closing documents, and title companies have authority to disburse as soon as all of the documents are signed. This may not seem like a huge benefit, but it is.

If you are signing your documents late in the afternoon, there may not be enough time left in the business day for the lender to review them and still get the funds wired to title in time to fund that day. This is can be especially troublesome if you are closing on a Friday or the day before a banking holiday.

Having moving trucks in front of your new home without having the keys to get into the property can make for an incredibly stressful day (or days if banks will be closed for a long holiday weekend). I highly advise working only with lenders that table fund their loans.

You’ll notice that I never mentioned obtaining your Certificate of Eligibility (COE) from the VA. That’s because you don’t need to do this yourself. Lender’s that originate VA loans, have the ability to obtain your COE on your behalf. So there’s no need for you to go through the trouble.

Now that you have a basic overview of the VA loan process you may be asking what activities should I avoid when buying a house. For answers be sure to watch my video “What not to do while buying a home” where I’ll be explaining in detail what activities can jeopardize your closing, and should be avoided at all costs.

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About the Author:
Ed Andrews III

Ed Andrews III is a mortgage loan officer, and U.S. veteran of the Iraq & Afghanistan Wars. He is an expert on VA home loans, and dedicated to helping veterans achieve home-ownership.