Veterans Affairs mortgage loans offer military members and veterans lending options with no down payments and low interest rates. Getting preapproved can help facilitate the lending process, but you’ll need to meet your lender’s eligibility requirements. And requirements can vary, so comparing VA mortgage lenders is vital to finding the right fit for you.
Preapproval basics for a VA home loan
The preapproval process may differ slightly between lenders, but the basics are the same.
Step 1: Check your credit
While there’s no set standard for VA loan credit requirements, lenders typically expect VA loan candidates to have a minimum credit score of 620. If your credit score is 620 or lower, you may want to consider other bad credit mortgage options.
Step 2: Compare lenders
Not all lenders are qualified to offer VA loans. Explore your loan options by comparing a lender’s fees, rates and online reputation.
Step 3: Get a Certificate of Eligibility
Once you’ve found a lender you like, you’ll need to apply for a Certificate of Eligibility (COE) to verify your veteran status. Apply online, by mail or through your lender.
Step 4: Fill out the application
Follow your lender’s preapproval process, which could be as simple as filling out an online application or may require you to meet with a loan officer. Keep in mind that if the lender requires a hard credit check, this process could lower your overall credit score by a few points.
Step 5: Gather documentation
Your lender requires a number of documents to complete the preapproval process, including bank statements, W-2s and tax returns.
VA mortgage loan requirements
To be eligible for a VA loan, you must meet one of the following requirements:
90 consecutive days of active service during wartime
181 days of consecutive active service during peacetime
Six years in the National Guard or Reserves
Additional requirements may vary from lender to lender, but in general, you’ll need a:
Credit score of 620
Debt-to-income (DTI) ratio of 41% or lower
Documentation
Your lender will need documentation to verify the following:
Employment history. Your lender will ask you to provide pay stubs, W-2 forms and information about your employer to verify your employment history.
Income. Be ready to supply tax returns, pay stubs and two months of bank statements to provide proof of income.
Military status. VA loan applicants must verify their military status in the form of a COE Military personnel must provide their military identification and documentation of their time in service for eligibility. Veterans are expected to provide DD Form 214, which you can request online through your VA ebenefits account.
Have documentation ready to shorten preapproval times
Loan preapproval can take anywhere from several days to several months, and longer for veterans and servicemembers trying to secure a Certificate of Eligibility. In some cases, it can take up to six weeks to receive your COE, depending on the application method. While preapproval letters last for typically 60 to 90 days — your COE never expires. So even if you’re rejected by a lender, you can use your COE for your next application.
What happens if I am rejected?
Rejection may sting, but it’s not the end of your chances to get a VA loan. You can ask your lender why your VA loan preapproval was rejected, address the issue and try again. Some of the more common reasons include:
Credit score is too low. There are a variety of strategies to improve your credit score, many of which can be accomplished in a relatively short period of time, but it starts with paying your bills on time and adjusting your budget so you aren’t abusing your credit limits.
Debt-to-income ratio is too high. Your DTI ratio can be lowered by paying off some of your debt before applying again and finding ways to boost your income.
Loan requirements are too strict. While the government provides base requirements for a VA loan, lenders are free to adjust them, which could put a loan out of reach for you. Shopping around may help you find a lender with more lenient loan requirements.
Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga.
Cornerstone Home Lending offers a standard list of mortgage loans with some portfolio options, but you have to contact a loan officer for rates and fees.
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