How to Get Prequalified For a VA Home Loan
Getting prequalified for a VA home loan is one of the most important steps in the home-buying process. Why?
First, prequalification shows realtors and sellers that you’re a competitive buyer. Selling agents may even advise their clients to reject offers from buyers who cannot produce a preapproval letter. Second, getting prequalified for a VA loan informs your purchasing power and helps you set a budget and narrow down your search to homes you can realistically afford.
So how do you get prequalified for a VA home loan? Read on, and we’ll tell you everything you need to know.
Certificate of Eligibility (COE)
VA loans are designed for those who have served in the U.S. military and have a Certificate of Eligibility (COE). A COE shows that you’ve met the minimum service requirements to receive a Department of Veterans Affairs loan.
To meet requirements, applicants must have served 90 consecutive days during wartime, 181 days during peacetime, or six years in the National Guard or Reserves.
To get your COE, you’ll need to gather your discharge documents—or you can request them online.
In addition to your COE, you may also need to provide the following:
- A copy of a government-issued photo ID
- A copy of your DD-214
- A statement of service letter from your commanding officer
- Pay stubs and generally W2s from the previous two years
- Tax returns for the last two years
- Bank statements
- VA and social security awards letters
- A copy of retirement account statements
Before pre-qualifying you for a VA home loan, lenders will perform a “hard inquiry” into your credit score. While hard inquiries can ding your credit score by several points, credit bureaus count multiple inquiries as a single check within 45 days.
Remember that while the VA doesn’t have set credit score requirements, the private lenders issuing your VA home loan may. As a result, credit score requirements can fluctuate between lenders, but most require credit scores of no less than 620.
In addition to pulling your credit, lenders may also be interested in your payment history, debt, and income. The VA favors those who have a debt-to-income (DTI) ratio of 40 percent.
How long does it take to get prequalified for a VA home loan? Of course, every situation is unique, but it does not take longer to qualify for a VA loan than a conventional or FHA loan. If you have all of your documentation in order, pre-approval can happen in as little as 24 hours.
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