A VA loan is issued by private lenders and only available to active service members, veterans, and eligible military spouses. Created in 1944 by the US government to help returning World War II soldiers purchase homes, VA loans are issued by private lenders and insured by the Department of Veterans Affairs (VA) if the borrower is unable to make payments.
The program has guaranteed more than 25 million VA loans since 1944, helping lenders provide better terms and interest rates to veterans who may not have high credit scores or the ability to make large down payments.
Specific periods of eligibility apply in order to obtain a VA loan, and only lenders approved by the VA can originate them. Selecting a VA specialty lender is recommended because they’re typically more experienced with the benefits that are available to military personnel.
There is even more help for veterans in the state of Texas. In 1983, the Texas Legislature created the Veterans Land Board Veterans Housing Assistance Program (VHAP) to help eligible veterans and military members purchase homes with low-interest rates and little to no down payments, as long as they meet certain criteria.
Lenders approved by the VA often specialize in working with military members and can originate VA mortgages. Using a VA-specific lender has benefits — they’re usually more knowledgeable on how the VA program operates, creating a streamlined and beneficial experience for military personnel.
After choosing a lender, a certificate of eligibility is required. A VA lender can help an applicant obtain this document, which proves that they meet eligibility standards and can receive VA loan benefits. This document also details how much entitlement a borrower may receive, which the VA will insure if loan payments are missed and the person defaults.
A certificate of eligibility can be quickly obtained through a lender portal or by visiting the va.gov website. Surviving spouses of military members and certain service members can also request to have the document delivered by mail.
The pre-qualification process can help expedite a loan’s progress, but it isn’t required. To pre-qualify for a loan, a borrower can approach a VA loan issuer with their credit history, employment status, marital status, income, current address, and more.
This can identify any problem areas that a borrower may need to improve upon before obtaining a VA loan, such as a poor credit score or an undesirable debt-to-income ratio.
Service members can begin searching for their homes online or through a real estate professional. It can be beneficial to hire a real estate agent who understands the VA loan and home buying process so that no details are missed. With a VA loan, certain fees are paid by the seller, and a VA-loan specialized agent can help negotiate these charges.
The borrower will then receive a signed purchase agreement, which is a contract that states the details of a home sale, including offer price, terms, and any additional conditions. The seller and buyer are then considered “under contract” once they’ve both signed the purchase agreement.
After receiving the necessary documentation, a VA lender will order an appraisal that must be completed by a VA-certified professional to ensure the home meets specific standards to qualify for VA financing. The appraiser will make sure that the home’s price matches the property’s current value. The property must also meet VA minimum property requirements (MPR) that include the following:
Once the appraisal is completed, the loan is verified by the VA-backed lender.
Though not required to obtain a VA loan, a home inspection can identify any code violations, property defects, or poor living conditions. Up to 10 days are allowed for the inspection, and the borrower will be asked to submit documents proving that they qualify for the VA loan during this time.
The lender and borrower will both sign documents stating that they agree to the written loan terms and length. The buyer will then provide proof of homeowner’s insurance if necessary and pay any closing fees. Once the property is legally transferred from the former owner to the buyer, they’re free to move into their new home.
VA-backed loans are a great way for military members to purchase homes. If you’re considering a VA loan for your new home, you should assess your current situation and home-buying goals to see if this type of loan is right for you. Learn more about our VA loans and get ready to find your dream home!