Ready to Buy using your VA Loan. Now What?
For many veterans and active duty service members, the dream of homeownership becomes a reality through the VA loan program! If you're a first time home buyer who has served in the military, utilizing your VA loan can be a fantastic way to achieve this milestone. In this guide, I'll walk you through the process of using your VA loan for the first time and provide valuable insights on where to start!
Understanding VA Loans:
Before diving into the home buying process, let’s talk about what a VA loan is and how it’s different from traditional loans. VA loans are backed by the U.S. Department of Veterans Affairs and are designed to help eligible veterans, active duty service members, and surviving spouses achieve home ownership!
Key Benefits of VA Loans:
No Down Payment: One of the most significant advantages of VA loans is that eligible borrowers can finance 100% of the home's purchase price without the need for a down payment. Note that “no down payment” doesn’t mean no out of pocket expenses. See bullet one under “Closing & Moving In.”
Lower Interest Rates: VA loans often come with lower interest rates compared to conventional loans, making home ownership more affordable.
No Private Mortgage Insurance (PMI): Unlike conventional loans, VA loans do not require borrowers to pay private mortgage insurance, which reduces monthly payments.
Flexible Credit Requirements: VA loans typically have more lenient credit score requirements, making it easier for first-time homebuyers with varying credit histories. According to the VA Guidelines, there is NO minimum credit score requirement, however different lending companies have their own rules for the “minimum credit score requirement.” So if one company denies your application due to a low credit score, you can continue to shop until you find a lender who can work with you!
Getting Started:
Find a VA experienced Real Estate Agent: Partnering with a real estate agent who is familiar with the VA loan process can simplify your home search. They can connect you with local lenders who specialize in VA loans (if you didn’t find the lender first) and advocate for you through the process.
Explore Lenders: While VA loans are backed by the government, they are issued by private lenders. Research and choose a lender with experience in handling VA loans for first time home buyers. If you choose to find a trusted agent first, they should be able to help you find a qualified local lender who specializes in VA loans. Selecting the Lender you want to work with from the beginning will help the next few steps happen seamlessly.
Determine Eligibility: Before proceeding, ensure that you meet the eligibility criteria for a VA loan. Generally, veterans, active-duty service members with sufficient service periods, and certain qualifying surviving spouses can apply. Answering a few simple questions to an experienced loan officer will check this box.
Obtain Your Certificate of Eligibility (COE): The COE is a crucial document that verifies your eligibility for a VA loan. You can obtain it online through the VA's eBenefits portal or your trusted lender can access it instantly on your behalf.
Understand Loan Limits: VA loans may have certain limits on the amount they can cover. Familiarize yourself with these limits to determine the price range of homes you can consider.
Home Search and Purchase:
Work with your VA experienced Real Estate Agent: Partnering with a real estate agent familiar with the VA loan process can simplify your home search. They can help you find properties that meet VA appraisal standards, connect you with local lenders who specialize in VA loans (if you didn’t find the lender first), and advocate for you through the process.
Negotiate the Purchase Agreement: Once you've found the right home, negotiate the purchase agreement with the seller. VA loans have specific requirements, so ensure that the contract is in compliance.
VA Appraisal: The VA requires an appraisal to ensure the property's value aligns with the loan amount. The lender will assign a VA Approved Appraiser to assess the property to determine its value and to make note of any appraisal required repairs. (This is separate from a home inspection, which is strongly recommended.)
Finalizing the Loan: With an accepted offer, your lender will finalize the loan process, including underwriting and approval. Be prepared to provide documentation regarding your income, employment, and credit history.
Closing and Moving In:
Closing Costs: While VA loans limit the closing costs veterans can pay, there may still be some out of pocket expenses. Negotiate with the seller to cover these costs, if possible. This could include your VA Funding Fee, appraisal fee, attorney fees, etc. These fees should be discussed with you by your trusted lender prior to closing.
Attend the Closing: Review the closing documents carefully and attend the closing to sign the necessary paperwork. Congratulations – you're now a homeowner!
Additional Resources:
If you’re active duty and would like to calculate your BAH (Basic Housing Allowance), you can visit this DOD website.
For a complete list of VA Loan Guidelines for buyers, you can view this PDF from the US Department of Veteran Affairs.
To view a list of my recommended local lenders, click here.
Using your VA loan for the first time as a home buyer can be a rewarding experience. By understanding the benefits, meeting eligibility requirements, and working with knowledgeable professionals, you can navigate the process with confidence. Remember to take advantage of the support available to veterans and service members throughout the journey to homeownership!
If you find yourself in the Fort Liberty area looking to buy a home using your VA loan benefits, contact me! I’m a military spouse and I specialize in helping military members and their families navigate the VA loan process and invest in themselves through homeownership! Even if you’re moving somewhere outside of the Fort Liberty area, I can help find you a qualified Real Estate Agent in my network of military affiliated real estate professionals. I can’t stress enough how important it is to work with professional who are well versed on the VA loan.
