How to Buy a Home With a VA Loan
Do you need step-by-step instructions to help you buy a home with a VA mortgage? This article explains how to apply for a VA loan to buy your dream home, step by step.
What Type of VA Loan Do I Need to Buy a Home?
To buy a home with a VA loan, ask your loan officer about a VA purchase loan, which could be used for an existing home or a VA mortgage to build the home from the ground up. Such loans are known as construction loans.
Who Offers VA Mortgages?
VA loans are typically offered through participating lenders. The VA promises to back a portion of the loan amount to make it less risky for the bank to offer you the loan. This is one reason why VA loans are offered with a no-money-down option.
Get a free, no-obligation consultation regarding your VA Loan!
How to Buy a Home with a VA Mortgage
Apply for your VA Loan Certificate of Eligibility (COE):
You can apply for your VA Certificate of Eligibility online at the VA official site or ask your participating lender to help you apply for the COE.
Learn more: The VA Loan Certificate of Eligibility
Review your finances
Don’t apply for any loan without reviewing your credit reports, debts, and credit card balances. You should decide early in the process how much down payment you can afford.
Some borrowers are better off making a down payment to reduce the VA loan funding fee and the overall amount of the loan. Decide early how much you can afford to put down and the overall price range for the house you want to buy.
Read more: Why You Should Consider a Down Payment on a VA Loan
Shop around for a lender
No two lenders are the same. You will want to compare lenders for the best rates and terms aggressively. If you are a first-time home buyer, any perks the lender may have for those buying property for the first time.
>> You may be eligible for a zero-down payment mortage with no PMI. For a no-obligation, free consultation regarding your VA Loan eligibility, please go here.
Decide whether to use a real estate agent
Not all home loan transactions require or even need a real estate agent, but if you are buying a home for the first time, it may be a good idea to consider using an agent.
Shop around for the right agent the way you shop around for a lender. Review online reputations, ask for recommendations from friends or family, and compare your options before you decide.
Related: VA Loan Closing Costs
Shop for a home
Shopping around for a home is as important as comparing lenders and real estate agents. The first house you get excited about may have hidden problems, or the price may be too high.
Compare similar homes, consider the price differences between them, and ask the seller plenty of questions about local traffic, weather-related issues, etc.
Once You Find a Home to Buy with a VA Mortgage
You’ll need a purchase agreement when you find a house you want to make a serious offer on. This agreement should include something known as the VA Escape Clause, also referred to at the VA official site as the VA Option Clause.
Whatever you call it, this is protection for the borrower. It allows you to walk away from the VA loan without penalty if the home does not appraise at or above the asking price.
You should also consider options in the purchase agreement, such as making the sale of the home contingent on passing a home inspection.
The Home Must Be Appraised
A VA appraisal is required for loan approval. This appraisal is paid for by the borrower, and if the appraisal requires corrections or repairs, these must be done as a condition of loan approval.
The home should be inspected: the inspection is different and more complete than an appraisal. DO NOT TRUST THE APPRAISAL ALONE. It is not intended to find all problems with a home. Use a home inspection to determine the true condition of the property.
What If the Appraisal Comes in Low
There are options if the appraised value of the home is lower than the asking price. In limited cases, a reconsideration of value may be justified, but you typically cannot get a reappraisal just because you disagree with the results of it;.
If the appraisal comes in low, you can renegotiate the price of the home, pay the difference between the appraised value and the sale price in cash at closing, or you can walk away from the deal.
Read more: The VA Loans Appraisal Process: What You Need to Know
Review Loan Documents Before Closing Day
Your lender must give you a Closing Disclosure for review at least 3 business days before you close the loan. Carefully review these documents and note any discrepancies. Do not sign loan documents if you have unanswered questions or concerns raised by your Closing Document.
Close the Loan and Accept Your Keys
The closing day may happen at an attorney’s office, an escrow office, or a title company, according to VA.gov, and you should give yourself plenty of time to carefully review all documents before signing and accepting the keys to your new home.
>> Interested in a VA home loan? You may be eligible for a zero-down payment mortgage with no PMI. For a no-obligation, free consultation regarding your VA Loan eligibility, please go here.
About the author
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.