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The VA Loan Process

The VA loan process has five key steps: Preapproval; the home search; getting under contract; underwriting; and closing.

For Veteran and military homebuyers, this journey doesn’t look much different than the process for other types of home loans. The big differences come in more when you look at the advantages VA loans offer, from $0 down payment and no mortgage insurance to flexible credit guidelines and the industry’s lowest average interest rates.

Let’s take a deeper dive into the VA loan process, starting with the first and arguably most critical step – getting preapproved.

Step 1: VA Loan Preapproval

Getting preapproved for a VA loan is a foundational first step. Loan preapproval is important on a couple major fronts.

One, preapproval gives veterans and military buyers a clear sense of their purchasing power. Two, it shows home sellers and their real estate agents that you’re a serious buyer who can make a strong offer and get to the closing table.

In today’s real estate environment, home sellers expect to see offers from preapproved buyers. Some might not even consider your purchase offer without a copy of your preapproval letter.

So what does it take to get preapproved?

Typically, lenders will start by asking about your homebuying goals, your military service and your employment history before getting your permission for a hard credit inquiry. Credit score cutoffs for VA loans can vary by lender, but a 620 FICO score is a common minimum.

Prospective buyers who meet a lender’s credit score benchmark will then need to provide documents to verify key information. Document requests can differ depending on the nature of your income, your military service history and more.

Documents you may need to provide during VA Loan preapproval include:

  • A copy of your driver’s license or other government identification
  • A copy of your DD-214 or Reserve/Guard points statements
  • A statement of service for active duty borrowers
  • Recent pay stubs and W-2s for the last two years
  • Recent bank statements
  • Disability award letters

Talk with your loan officer if you have questions about documentation needs. The faster you get this paperwork back to the lender, the faster they can move to verify information and finalize your loan preapproval.

MORE: Check your eligibility for a VA loan

The loan officer will go over your paperwork, double check your income and other key details to verify your purchasing power and make a determination about whether you’re ready to move forward.

The loan preapproval process builds toward an important final step – generating a preapproval letter. If everything checks out, the lender will issue a preapproval letter. These aren’t a guarantee of financing, and they typically come with a host of conditions that need to be met.

But they’re powerful tools that give VA borrowers a clear sense of their purchasing power. They also show real estate agents and home sellers that you’re a strong and serious buyer.

In fact, some listing agents and sellers only accept offers from preapproved buyers. That letter gives them confidence you’ll follow through on the offer and make it to closing day.

Step 2: The House Hunt

With a preapproval letter in hand, you're ready to start the most exciting stage of the VA purchasing process – the house hunt.

Finding a real estate agent who truly knows VA loans is critical. These are more specialized home loan options, and some properties can be a better fit for VA loans than others. Plus, VA loans also offer big-time advantages when it comes to things like closing costs, and veteran-friendly agents can help buyers get the most from their benefit.

Veterans United works to connect buyers with VA-savvy agents through Veterans United Realty, our national network of agents who understand the needs of military buyers.

VA buyers can use their home loan benefit to purchase:

  • Existing single-family homes
  • New construction *
  • Condos
  • Manufactured and modular housing *
  • Multi-unit properties
* Veterans United does not currently make construction loans or loans for manufactured housing.

Like the other government-backed mortgage options, VA loans are for purchasing primary residences you intend to live in full time. Veterans can look to buy a multiunit property (up to a four-plex) as long as they intend to live in one of the units.

Homes generally need to be in good shape. The VA appraisal process includes a look at the home in light of some broad property condition requirements, known as the Minimum Property Requirements. This a high-level look at a home and not as in-depth as a home inspection.

If the appraiser notes MPR issues, they may need to be addressed before the loan can close. VA buyers can ask sellers to pay for repairs and even cover the cost themselves if needed.

Purchasing a fixer-upper is possible with a VA loan, but they can present challenges for the VA appraisal process. Talk with a loan specialist in more detail if you’re looking for that type of property.

Once you find a home that you love, the next step is making an offer to buy it.

Step 3: Getting Under Contract

Your loan officer and a trusted real estate agent can help you craft a strong offer.

Your agent will look at recent comparable home sales in the area to help shape your starting point for a purchase price. Pricing and negotiation strategies can vary depending on the real estate market, the particular home and much more.

Veterans should talk with their loan officer and agent about closing costs before making an offer. VA loan closing costs can vary depending on a host of factors. Buyers can ask sellers to pay all of their loan-related closing costs and up to 4 percent in concessions, which can cover escrow expenses and much more.

Most prospective VA buyers will present a contract with several contingencies that cover certain events leading up to the loan closing. Common contingencies cover things like the right to have a home inspection and how to handle repair requests; how many days the buyer has to secure financing; how much earnest money will be deposited; and more.

The VA doesn’t require a home inspection, but they’re almost always a sound investment. The VA appraisal includes a look at the home in light of broad property condition requirements, known as the Minimum Property Requirements, but this assessment isn’t as in-depth as a home inspection.

MORE: Learn more about Minimum Property Requirements

Every VA contract features added protection for the veteran’s earnest money when it comes to the VA appraisal. There’s a special addendum that ensures VA buyers get their earnest money back if the property’s appraised value comes in low and the veteran decides to back out of the deal.

It might take VA buyers a couple rounds of negotiation to lock down a purchase agreement. Every buyer-seller situation is different.

Step 4: VA Loan Underwriting

The VA loan process jump-starts once you’re under contract to buy a home. Your loan team will send your contract and documentation to loan processors and underwriters so they can take a closer look at your overall purchasing picture.

The lender will also prepare to order the VA appraisal through the Department of Veterans Affairs. This is a cost that buyers typically cover up front, although it’s possible to seek a reimbursement from the seller at closing.

The VA assigns an independent, third-party appraiser to assess the property’s value and condition. Lenders have no control over the appraiser, their time line for conducting the appraisal, or their assessment of the property.

The appraiser will look at recent comparable home sales when evaluating the home’s fair market value. Buyers will need the home to appraise for at least what they’ve offered to pay for it. If an appraisal falls short, the buyer and seller will need to renegotiate the purchase price or end the transaction.

If the appraiser notes repairs are needed to meet the VA’s Minimum Property Requirements, buyers can ask the seller to pay for those or even cover the costs themselves in some cases.

While the appraisal process is unfolding, buyers should be prepared for questions and requests for additional information from their loan team. The lender’s underwriters will be looking at financial, employment and other documents to make sure you have the willingness and ability to repay the loan.

The faster you get back to your lender with answers and information, the smoother this stage tends to go. Talk with your loan team if you have any questions or need additional explanation about an underwriting request.

Once the appraisal is finalized and underwriters feel good about your loan file, you’ll be considered “clear to close,” which means you’re ready to head to your closing day. Being “clear to close” is still not a guarantee of financing, but you’re just about there.

Step 5: Your VA Loan Closing

VA buyers will receive a Closing Disclosure shortly before their scheduled loan closing. This document allows buyers to compare their final closing costs and loan information to estimates they received earlier in the process.

Your loan officer will typically review this document with you. Be sure to ask if you have any questions about your costs and fees or anything else.

Lenders will often verify your employment and other key information one last time before your loan closing. Notify your loan team immediately if anything changes with your employment or income status.

It’s also important to avoid taking on new debt or moving money around once you start the VA loan process.

Buyers will often have a final walk-through of the property they’re purchasing. This allows you to make sure any repairs were completed satisfactorily; that items you didn’t want to stay behind have been removed; and more. Contact your real estate agent and lender as soon as possible if there are any problems.

When closing day arrives, you’ll sign final paperwork and get the keys to your new home.