How to get a VA loan
It is smart to set up financing even before house hunting. Pre-planning your financing allows you to move quickly once you find the right home. We have created this step by step guide for those veterans who decide to use their eligibility to make a home purchase using a VA Housing Loan.
Please bear in mind that you can only use a new VA Home Loan to purchase your principal place of residence.
Step 1 – Obtain your Certificate of Eligibility
(Note: Due to the volume of VA Loans that we originate, Freedomstar Financial can usually take care of this for you.)
If you think you are eligible for a VA Home Loan guaranteed by the VA, your first step is to secure a certificate of eligibility. To get this form, you can submit an application (VA Form 26-1880) along with proof of your military service. You can send it to:
VA Loan Eligibility Center
PO Box 20729
Winston-Salem, NC 27120
Most lenders can furnish the forms and help you complete them if needed. If the VA has sufficient data on you because you are already in the VA System (for example, you are receiving VA health care or educational benefits), your lender may be able to obtain a certificate of eligibility for you via the Internet. The online Automated Certificate of Eligibility (ACE) system can establish eligibility and issue an online Certificate of Eligibility (COE). Ask your lender about this method of obtaining a COE.
In order to prove your Military Service and receive your COE, you will need a DD Form 214. If you were discharged after January 1, 1950, and before October 1, 1979, you’ll need a photocopy of DD Form 214 (Certificate of Release or Discharge from Active Duty). If you were discharged after October 1, 1979, a photocopy of DD Form 214 copy 4 should be included.
If you served in the Selected Reserves or National Guard there is no form similar to the DD 214. If you were discharged from the Selected Reserves or National Guard, you will need to provide documentation of at least six years of honorable service. For service in the Army or Air Force National Guard, submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting (or its equivalent). If you were discharged from the Selected Reserve, submit a copy of your latest annual points statement and evidence of honorable service.
Step 2 – Apply for the VA Home Loan
To get pre-approved for a VA Home Loan, you will need to provide a few documents in order for your lender or broker to qualify you for the loan.
These items include the following:
Authorization to Pull a Credit Report
Employment and Income Information
Loan Application Form 1003
Tax Returns for the Prior 2 Years
With this information, your broker or lender can advise you regarding how much you can realistically borrow utilizing a new VA Home Loan.
Once you are pre-approved, you can begin the search for a new house. Your VA Home Loan can cover a variety of properties, including single family homes, condominiums, townhouses, multifamily properties up to 4 units and even provide the funds needed to build a new house.
Step 3 – VA Appraisal
Once you’ve selected a home and opened escrow, you will need to order an appraisal. You can ask your broker or lender to order the appraisal for you. They will ask you for your payment information. The VA approved Appraiser will evaluate the home and compare it to other properties on the market. She will then determine the market value of the house and generate a report to the VA. After a review, the VA will issue a Certificate of Reasonable Value (CRV). The CRV establishes the maximum amount of the loan.
The VA Appraisal does not take the place of a professional inspection done by a certified home inspector. The VA guarantees the loan, not the condition of the property. The VA requires the appraisal to make sure the loan they are guaranteeing is in line with the value of the home that secures the loan.
Step 4 – Close and Fund Your VA Home Loan
Once you have the Certificate of Reasonable Value and your lender has the loan prepared then you will sign the closing documents, which is the final step in obtaining your VA Home Loan. The closing is usually held at the title company. At that time, the deed of title, financing papers, remaining funds due, and title insurance policies are exchanged. You can move into your new home as soon as the loan closes and the funds are wired.