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 “preapproval”). 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.
First, let’s discuss the unique VA loan approval process.
How Does VA Loan Preapproval Work?
VA loan preapproval, also called initial approval, works similarly to preapproval for other types of home loans. The preapproval process lets lenders review your finances so you know how much house you can afford.
Since not everyone qualifies for a VA loan you’ll need to show you’re a qualifying veteran during the approval process. Let’s take a closer look at the qualifications and the documents you might need to obtain.
VA Loan Eligibility Requirements
To get a VA home loan, you need a valid VA Certificate of Eligibility (COE). This shows you’ve met the minimum service requirements to be eligible for a loan through the U.S. Department of Veterans Affairs. Briefly, these are the requirements:
- Served 181 days during peacetime (active duty)
- Served 90 days during wartime (active duty)
- Served 6 years in the Reserves or National Guard or 90 days under Title 32 duty, at least 30 of which are continuous
- Survived a spouse who was killed in the line of duty or lost their life from a service-related disability
The VA website has more information on distinguishing between wartime and peacetime service. Service requirements are waived if you’re discharged because of a service-related disability.
If you’re a veteran, you need your military discharge document (DD 214) to verify your service time and get your COE. You can request this online if you don’t have a hard copy. If you’re currently serving in the military, you’ll need your Leave and Earnings Statement (LES) to show your military status and income to qualify for a VA loan.
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Prequalification Vs. Preapproval For A VA Home Loan
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. You’ll need to get prequalified or preapproved to present a strong offer to sellers and their agents.
Let’s take a quick look at these two types of qualifications.
Prequalification
During a prequalification, mortgage lenders pull your credit score to get a look at your median FICOⓇ 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 aren’t verified, this is just an estimate. A preapproval is a stronger indicator of your current situation because lenders verify more of your financial details.
Preapproval
During a preapproval, mortgage lenders look more closely at your income, debt and other indicators of your ability to repay your mortgage loan. Let’s 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 driver’s license and Social Security number.
How To Get Initial Approval For A VA Home Loan
Ready to start the preapproval process? Just follow these steps to get started.
1. 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 loan’s 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. You’ll 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.
2. Get Your COE
If you haven’t already, make sure you get your Certificate of Eligibility (COE) when you begin the home buying process. You’ll need a copy of your discharge document (DD 214) to give to your lender to allow them to verify your COE.
3. Gather Your Documents
You’ll also want to make sure you have other common documentation handy. Here’s a list of some of the common documents you’ll need to start your initial approval:
- W-2s
- Pay stubs
- Proof of employment
- Bank statements
- Social Security card
- Current driver’s license
Having these documents on hand will help streamline your VA loan application.
4. Apply For Initial Approval For A VA Home Loan
Once you’re in a solid financial position and you’ve gathered your documentation, it’s time to submit for initial approval.
Once your lender has your information, they’ll evaluate the application to see if you qualify for a VA home loan. A representative will reach out if we need any additional information or documentation. At this stage, your eligibility and financials will be reviewed to determine the amount of loan amount you could qualify for.
5. Receive Your Preapproval Approval Letter
If everything is in order and you meet the VA loan eligibility your lender will preapprove you and send an initial approval letter. This letter outlines how much home you can afford and shows sellers you have a mortgage lender on board. Once you have your letter, you can house hunt with confidence and present sellers and their agents with a strong offer on a new home.
FAQs About VA Loan Preapproval And Approval
The approval process can be a bit overwhelming for any home loan. We’ve got answers to your frequently asked questions on how to get approved for a VA home loan.
How long does it take to get preapproved for a VA loan?
The circumstances of each loan are different, but it doesn’t take any longer to get approved for a VA loan than it would for a conventional or Federal Housing Administration (FHA) loan. Depending on your lender you can expect a range of approval times, but it typically takes just a few business days.
How long is the preapproval letter good for?
Generally, preapproval letters last 60 – 90 days. This is because a home buyer’s financial situation can change in a short period of time. Employment status, credit score and debt-to-income ratio can all shift quickly and could affect the loan amount mortgage lenders will approve.
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The Bottom Line
If you’re an eligible veteran, service member or surviving spouse looking to buy a home soon, it’s essential to understand the requirements and processes for getting initial approval on your VA home loan. Being prepared will give you the greatest chance of being approved for your home loan quickly and easily.
Kevin Graham
Kevin Graham is a Senior Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a bachelor's degree in journalism from Oakland University.
