How to prequalify for a VA loan
The VA Guaranteed Home Loan Program has been helping veterans acquire home loans for more than 70 years. The program has remained popular because it offers a number of benefits for military veterans and active duty individuals. The application process for a VA home loan is slightly different from a conventional mortgage, but applicants can speed up the process by pre-qualifying for a loan amount.
What is prequalification?
Pre-qualification is a process in which your loan qualification information is taken before you purchase a home to determine if you meet the lender’s initial requirements and how much you can afford. Although it does not guarantee that you will obtain a mortgage loan from a lender, it does mean that you are qualified and will most likely be approved for the mortgage.
Benefits of Prequalification
Being prequalified for a home loan offers potential buyers a number of benefits, such as:
- The price range you can afford is determined: This feature can save time by allowing you to search only for homes within your price range.
- Being prequalified makes you a more desirable buyer: Sellers who have multiple offers often accept offers from buyers they know have already been approved.
- Takes the guesswork out of homebuyers – Knowing you’re prequalified for a loan can ease the stress of finding and buying a home.
- Pre-qualification allows you to negotiate better terms: The certainty of having a loan approved can allow you to negotiate small problems with confidence.
- Prequalification can help speed up the closing process: it reduces the chance of “surprises” that can delay the closing of the sale.
How to get prequalified for a VA loan
Applicants for a home loan through the VA program will be required to provide a number of documents for prequalification:
- Provide information about your military service: A Certificate of Eligibility is required to apply for a VA-guaranteed home loan. This document can be acquired by filling out the corresponding form. However, you can start the prequalification process before receiving the Certificate. In many cases, the lender will help you submit the required document.
- Credit Information: The lending institution may request permission to review your credit score. If there are any issues with your credit history, they may suggest that you resolve past debts or correct information to get pre-approved.
- Employment information: The lender will ask you to see proof of your current employment and previous employment. Generally, lenders prefer to see two years of steady employment. However, gaps in your employment record do not necessarily disqualify you for a loan.
- Bank Statements or Investment Statements – The lender will also want to know about your financial health in regards to how much money you have saved and any investments you may have. This information would also include any real property to which you have a deed.
- Divorce documents and spousal/child support: Lenders also generally want information about divorce decrees and any support payments you may owe that may affect your ability to repay the loan.
Prequalifying for a VA home loan can be an advantage that can help homebuyers get the best home for their needs at an affordable price. Consider getting pre-qualified when you start looking for your new home.