How VA Loans Are Processed – VA Handbook Chapter 5
Knowing how your VA loan is going to be processed is good information to have to go into your first meeting with your loan officer. You can be more prepared for that meeting with all the documentation you will need and a lot of the information the loan officer is going to ask for in order to get the process going. Plus, you’ll be prepared for your loan officer or underwriter to ask for more documents and will be ready to get those documents ready very promptly after receiving the request. You’ll need to establish your eligibility for getting a VA loan, establish your credit and income qualifications for the loan amount you’re requesting, and get your application through underwriting.
Make Sure You Can Use a VA Loan
This is the first step you’ll go through when your VA loan is being processed. You’ll be required to obtain a COE, which you’ll probably want to do through your loan officer. They have easy access to an online system where they can retrieve your COE fairly quickly. To get your COE, you will need to provide proof of service. If you are a veteran, you can simply provide your DD-214, but if you are still on active-duty, you’ll need to provide a statement of service from the leadership of your company. Part of the process of making sure you can use a VA loan involves the home itself; you need to make sure it meets the VA’s Minimum Property Requirements, which means calling in a VA appraiser to inspect the home. After that, you’ll also need to make sure you fulfill the occupancy requirement, which means you are intending to occupy the home as your primary residence. Next, you need to make sure you’re qualified for the loan amount you are applying for.
Make Sure Your Income and Credit Are Sufficient
Once you and your loan officer have made sure that you are eligible for the VA loan program, the next step will be to get information on your credit and income qualifications. This can happen in the same sitting as the first step, especially if you are prepared. They’ll ask a lot of questions about your financial history over the last two years and want to get clarification on any gaps in your employment over that time frame. If you’ve got a full-time job, you’ll need to provide pay stubs for at least the last 30 days. If you are using part-time work or self-employment income to qualify, they will require a lot more documentation. They will also need a good phone number to call your employer and verify your employment. If you’re not sure what number to give them, just give them the HR department’s. Your lender will be able to run a credit report just using your personal information such as your name and SSN. However, it’s a good idea to run your credit report a few months beforehand so that you can see any issues that might be bringing your score down.
Getting Your Loan Application Through Underwriting
Underwriting can be either the simplest part of the process or the biggest headache. If, in working with the loan officer, you were just barely able to qualify for the loan, you can expect that the underwriter is going to ask for some more information to make them feel safer about approving the loan. These can be anything from more bank statements to an outline of your monthly budget and where you are spending your money, to a list of your current assets that can count as compensating factors. Really, the sky’s the limit on what the underwriter might ask for.
However, if you easily qualify for the loan amount you’re getting and there are no concerns about your creditworthiness, then underwriting will probably happen very quickly with little to no involvement on your end.
Chapter 5 Of The VA Lender’s Handbook
Chapter 5 of the Handbook is mostly about how the lender is expected to process loan applications. Much of it has nothing to do with the borrower and is not important for you to know. If you’re trying to learn as much about the VA loan program as possible then it’s a good thing to read, but for most people, all of the really valuable information in Chapter 5 is in this article.