8 Expert Tips for Getting Approved for a VA Loan

Serving our nation is a tough job, but it does have its perks. One of them? Being able to finance your home purchase through a VA loan.

VA loans are backed by the U.S. Department of Veterans Affairs and are available to veterans — including service members, National Guard members and prisoners of war (POWs) — and eligible surviving spouses who want to buy their first home or another property, or who are looking to refinance their home.

The program allows those who qualify to take advantage of a unique set of benefits, including $0 down payment, low interest rates and closing costs and the ability to forgo private mortgage insurance, just to name a few.

Below we've put together a useful list of VA loan tips to help you achieve your dream of homeownership. Though the process closely mirrors that of getting a conventional loan, there are some key differences of which you need to be aware. Learn more in this veterans home buying guide.

Table of contents

1. You can get started without the Certificate of Eligibility (COE)
2. Your credit score still matters, but it’s not everything
3. Make sure you have enough saved
4. Pay the VA funding fee
5. Shop for a VA lender and get pre-approved
6. Hire a real estate agent that’s VA-savvy
7. Choose a property that’s VA-approved
8. Close the deal only when you’re ready to move in

1. You can get started without the Certificate of Eligibility (COE)

The Certificate of Eligibility or COE is issued by the U.S. Department of Veterans Affairs as proof that you have fulfilled the minimum military service requirements to be eligible for the VA home loan benefit. In other words, the COE is your golden ticket to getting a VA loan.

However, it’s not absolutely necessary to have the COE before you start. According to John Bell, deputy director of the VA’s Veterans Benefits Administration, prospective homeowners can still get pre-approved without a COE since it's usually verified during the loan process itself.

It’s also a common misconception that you have to procure the document yourself. Bell says mortgage lenders can get the COE for you. Roughly 80% of the time, they can get it instantly. Otherwise, it can take up to five business days.

But if you want to be cautious and make sure you meet the service requirements before applying for the loan, you can always request a copy of your COE through the VA’s eBenefits portal or by reaching out to one of the VA regional loan centers in your area.

2. Your credit score still matters, but it’s not everything

True, VA loans generally offer lower interest rates and better loan terms than conventional loans, even if you don’t have stellar credit. That being said, though the VA does not set a minimum credit score, your credit score will have some bearing on what rate and terms you’ll receive.

Isabel Williams, broker-owner of We Save Loans, a Florida-based mortgage company that specializes in VA mortgages, says that VA loan lenders will still need to check your credit score to approve you for the loan and determine your interest rate, just as with a conventional loan.

And as with any loan, the higher your credit score, the better the deal. With VA loan rates already so favorable, a good credit score will allow you to get a rock bottom variable or fixed rate and mortgage payment, allowing you to make the most out of your hard-earned entitlement.

If your score isn't the greatest, don’t lose heart. According to Williams, lenders tend to be more flexible with VA loans and look at your overall financial picture.

“They are more holistic,” Williams says. “They look at what your credit history looks like, and what your income versus debt looks like.” VA lenders will look at your residual income, which is how much money you have left after paying taxes, debt-to-income ratio and other necessary expenses.

Regardless of your credit score, it's a good idea to pull up a copy of your credit report so there are no surprises before you apply. These could take the form of negative marks like delinquencies and accounts in collection you may not have known about.

You can get a free copy of your report from all three major bureaus (Experian, Equifax and TransUnion) by visiting AnnualCreditReport.com.

If, after checking your report, anything seems amiss, you can contact the bureaus directly to get any inaccuracies removed from your credit report. You can also hire a credit repair company to help you do this if you don’t feel confident enough to repair your credit yourself.

3. Make sure you have enough saved

It’s a common misconception that because VA loans don’t require a down payment, buyers won’t be required to pay anything upfront out of pocket. “People hear this a lot,” Williams says. But it couldn’t be further from the truth.

Even if you don’t need a down payment, you’re still responsible for certain closing costs, including the following:

• Loan origination fees
• Application fees
• Discount points (if applicable)
• Hazard insurance
• Real estate taxes
• Title insurance
• Recording fees
• Appraiser fees
• Home inspection fees

Other third-party fees, like brokerage fees and termite reports, are absorbed by the seller with VA loans.

4. Pay the VA funding fee

Most folks will have to pay the VA funding fee. The funding fee is a one-time payment you make which enables VA loans to have favorable terms, such as no down payments or monthly mortgage insurance. The fee varies depending on whether you are a first-time homebuyer and if you make a down payment. It can be up to 3.3% of your loan amount.

Some of these costs can be rolled up into your loan, but that will result in a higher monthly payment. That’s why Williams recommends building a nest egg to pay these fees upfront at closing before beginning the home-buying process.

There are a couple of ways you can prevent your funding fee from impacting the monthly cost of your VA loan:

• You can choose to pay your funding fee upfront to mitigate monthly costs for your VA loan. However, veterans and their surviving spouses might not be able to find the money to cover this fee. If you go down this road, you must pay your funding fee by the date your property closes.

• Although a downpayment is not required for VA loans, you can put money down on your property to reduce your loan amount and, therefore, your funding fee. For example, a borrower who makes a 10% down payment on a $1 million property will reduce their loan amount to $900,000. If the funding fee is 3%, this down payment will reduce that amount from $30,000 to $27,000.

Although a funding fee can impact how much you pay every month for your VA loan, this type of finance doesn't require PMI, often offers lower interest rates and has closing cost limits. Therefore, the overall cost of purchasing a property with a VA loan will likely still work out to be cheaper than buying a home with a conventional loan, purchase loan or another type of mortgage finance.

Plus, some people, like borrowers who receive VA compensation for a service-connected disability and service members with a proposed or memorandum rating before their loan closes that entitles them to compensation, don't have to pay a funding fee. You can also get a refund for your funding fee if awarded VA compensation for a service-connected disability in the future.

Not everyone has to pay the VA funding fee. You don't have to worry about this cost if any of the following apply to you:

• You receive VA compensation for a disability connected to your service

• You're eligible to receive VA compensation for a service-connected disability but receive active-duty or retirement pay instead

• You're a service member with a proposed or memorandum rating before your loan closing date that entitles you to get compensation due to a pre-discharge claim

• You receive Dependency and Indemnity Compensation (DIC) because you are the surviving spouse of a veteran

• You're on active duty and provide evidence of receiving the Purple Heart before or on your loan closing date

You might get a refund for the VA funding fee if you are awarded VA compensation for a disability connected to your service in the future. Your compensation must have a retroactive effective date that's before the date you closed your loan. You can't get a refund for the VA funding fee if you receive a proposed or memorandum rating after your closing date.

You can apply for a refund or check eligibility requirements by calling your local VA center at 877-827-3702.

5. Shop for a VA lender and get pre-approved

Fact: Shopping for lenders isn’t as fun as house hunting. However, it’s a necessary step in order to secure the best terms and interest rates and make sure you save money down the line.

There are different types of companies offering VA loans these days, so how do you choose the right one?

First, there are many reputable private lenders that exclusively cater to military members, veterans, military spouses and their families. Veterans United, USAA and Navy Federal all have vast experience servicing VA loans and can help make the application and lending process smoother.

Still, it pays to shop around and compare offers from multiple lenders. You can always use a rate comparison website, like LendingTree or Credible, which feature VA loans and are completely free.

You can also get multiple offers from a mortgage broker. Independent mortgage brokers do charge a fee for their services, but Williams says that sometimes you can compare mortgage rates from as many as 100 lenders with just one credit inquiry, saving you time and minimizing the impact on your credit.

Getting many offers can sometimes lead to the situation where you have more than several contenders offering similar rates and fees. In these cases, you need to check out who has the best track record. You can do this by looking them up in the Nationwide Multistate Licensing System (NMLS) or the Consumer Financial Protection Bureau’s database.

Once you’ve chosen your lender, it’s time to get pre-approved. This will allow you to know how much house you can afford.

Here’s a list of the things you’ll have to provide the loan officer for this process:

• An official form of identification, such as your driver’s license or passport

• Your social security number

• Proof of income in the form of paystubs, W2s or your two most recent tax returns

• Statements of assets (savings accounts, IRAs, etc.)

• Statements of debts

Pre-approval is essential in today’s highly competitive market, as it will allow you to make an offer faster to secure your new home.

Note: The Department of Veterans Affairs provides a loan guaranty on VA loans purchased through a private lender. If you default on your mortgage, the government will pay a portion of your debt to the lender.

There are a few key differences you should keep in mind when shopping around and comparing VA loans and conventional mortgages.

No down payment

While most conventional loans require a downpayment of anywhere from 5% to 20% and above, VA loans allow you to finance up to 100% of the purchase price of a property. That can make it easier for you to afford a home.

No private mortgage insurance

As well as no down payment requirement, you don't need to purchase private mortgage insurance (PMI) with VA loans. PMI is required on conventional loans when a borrower can't provide a down payment of more than 20% of the property price. The cost of PMI is around 0.5% to 1.5% of the loan amount on a property per year, so removing this requirement for VA loans will definitely save you money.

Closing costs cap

With all home loans, you pay closing costs to cover loan origination, processing, underwriting and other expenses. The VA also limits or prohibits certain fees associated with closing, such as certain inspection fees and attorney fees. Though it depends on the property price, veterans and their surviving spouses typically pay less in closing costs than people taking out conventional loans.

More flexible credit requirements

There is no minimum credit score requirement for a VA loan, and the Department of Veterans Affairs requires lenders to evaluate a borrower's entire loan profile when assessing their application for a mortgage. That means you might qualify for a VA loan even if you fail to meet the credit requirements for a conventional loan.

Lower interest rates

VA loans typically come with a lower interest rate than conventional loans, allowing borrowers to pay off their properties in a quicker time frame. Although interest rates change daily, you can expect to pay around 0.25% less in interest rates on a VA loan compared to a comparable FHA loan or other type of mortgage.

VA loans with a lower interest rate than regular VA loans are available for veterans or their spouses who are Native American. The Native American Direct Loan (NADL) program helps these borrowers get a loan to purchase, build or improve a property on federal trust land. The Department of Veterans Affairs reduced the interest rate for NADLs from 6% to 2.5% in March 2023. This reduced rate will be available for no more than 24 months.

Refinancing options

If you want to refinance your current home, you can apply for VA cash-out refinance, which lets you borrow up to 90% of the value of your property. Cash-out refinance is different from a home equity loan, where you borrow money against the value of your home minus the amount of the mortgage on your property.

Renovation loans

VA renovation loans are made up of two loans. A home purchase loan finances the purchase price of your property up to its current market value. An additional home improvement loan can help cover renovation costs to improve your property. The amount you can get for renovation costs will depend on the lender. Just like conventional VA loans, you won't have to provide a downpayment or take out PMI with a rehab loan. However, not as many lenders offer this type of loan compared to regular VA mortgages.

6. Find a real estate agent that’s VA-savvy

It’s also important to find a realtor who is an expert in VA loans, according to Williams.

“It's already a pretty tough market, and not having someone that understands the VA loan process or how to actually put together that offer could possibly hurt you” she says.

To be eligible for a VA loan, the chosen home must meet certain property requirements (see tip #7 ahead). So, having a real estate agent that knows the market, what’s allowed by the VA and how to draft a successful offer is crucial to getting the best deal on the home you want.

There are also various other VA loan products a VA loan specialist would be the most familiar with, including VA loan refinance, cash-out refinancing and interest rate reduction refinance loans (IRRRL).

To find a VA-savvy agent, contact your VA regional loan center to see if they have someone they can recommend in your area. Some lenders, like Veterans United, also have their own division of real estate agents that specialize in finding VA-approved homes.

VA loans have different terms and requirements than regular mortgages, making it important to work with a real estate agent who has knowledge of this type of finance. There are a few things you should look for when hiring a real estate agent.

VA loan experience

Agents should have experience working with veterans and their spouses and understand the terms and conditions of the VA loan program. For example, VA-savvy agents should know about the VA's minimum property requirements (MPRs), which set standards for which homes can qualify for loans.

An MRP certification

Real estate agents with a Military Relocation Professional (MRP) certification have knowledge about working with veterans and their families, making them a good choice for helping you find a home. These professionals can also help you claim all the VA benefits you are entitled to when purchasing a property. You can find agents in your area with an MRP certification on the National Association of Realtors website.

Communication skills

Active-service duty members might have busy schedules that prevent them from looking for and visiting properties. VA-savvy agents understand this and should be prepared to communicate with borrowers outside of regular business hours and via various technologies. For example, someone in the military serving abroad might not be able to communicate with an agent over the phone, requiring the agent to send property information via email.

Links with VA lenders

Many real estate agents that work with veterans have connections with lenders who offer VA finance, which speeds up the home-buying process. Agents can recommend specific loan products based on the borrower's requirements and forward details to recommended lenders.

Local knowledge

A borrower might need a property in a specific area away from a big city, such as close to a military base. In these circumstances, agents should know about local areas and services and provide this information to borrowers and their families to improve the home-buying process.

7. Choose a property that’s VA-approved

To use a VA loan, the property you want to purchase must be VA-approved. In general, the VA requires a home to be safe, sanitary and structurally sound.

All properties must also pass a VA appraisal for VA loan eligibility. This appraisal is conducted by someone chosen by the VA, and its main purpose is to determine whether the property is in good livable condition and that its selling value is in accordance with other similar properties. There are some other requirements that the property you want to buy may have to meet.

Multiunit homes

While duplexes, triplexes and four-plexes are eligible for VA loans, these properties can't solely be used for rental or investment purposes. You must occupy one of the units as your main residence.

Mobile homes

To qualify for a VA loan, mobile homes must be properly attached to a permanent foundation. Single-wide mobile homes must be at least 400 square feet, while double-wide homes must be at least 700 square feet. All mobile homes must have permanent cooking, sleeping, eating and sanitary facilities.

New-build homes

New constructions are eligible for VA loans, but three separate inspections are required to ensure builders, plans and building sites are VA-approved. Builders also have to provide at least a one-year warranty for new-build homes.

Modular homes

These homes must be affixed to a permanent foundation to qualify for a VA loan. A modular home must also be constructed according to Department of Housing and Urban Development (HUD) guidelines or receive a certification from the state in which it was built.

Condominiums

For condos to be VA-approved, the following must apply:

• Condo buildings must have more than one unit

• No single person, investor or company can own more than 10% of the units in a building

• Only 50% of units in a condo building can be rented to tenants

• 85% of condo owners must be up to date with their homeowners' association fees

It's important to check whether a condo is VA-approved before applying for finance. You can do this by requesting a customized condo report on the VA website.

Remember we said that not all properties can be financed through a VA loan? Well, here’s why.

John Bell, from the VA’s Veterans Benefits Administration, says that the VA home loan program was designed as an “owner-occupied program.” This means that you can’t use a VA loan to purchase a vacation home or an investment property. It must be the borrower's primary residence. Additionally, not all condominiums can be financed through a VA loan.

“Condominiums must meet certain requirements to be eligible for VA lending,” Bell says. “Some of those requirements are things like first right of refusal when you go to sell the property,” he adds.

If you already have your eyes on a specific condo, you can find out if it is VA-approved by looking it up on the VA’s condo database. If it isn’t, don’t fret. Bell says you can always contact the VA to request an evaluation of the complex to see if it can be added to the list. This process can take as little as two weeks.

All properties must also pass a VA appraisal for VA loan eligibility. This appraisal is conducted by someone chosen by the VA and its main purpose is to determine whether the property is in good livable condition and that its selling value is in accordance with other similar properties.

8. Close the deal only when you’re ready to move in

In order to be eligible for a VA loan, you must complete the VA’s minimum occupancy requirement at closing. This is a document in which “you must certify that you intend to occupy the property as your home.”

The VA considers 60 days from your closing date as a reasonable timeframe for you to occupy the property (although, in some circumstances, this period may be extended up to 12 months). If you’re an active-duty service member, your spouse or a dependent family member may satisfy this requirement for you by moving in first.

Summary of the 7 VA Loan Tips:

1. You can get started without the Certificate of Eligibility (COE)
2. Your credit score still matters, but it’s not everything
3. Make sure you have enough saved
4. Pay the VA funding fee
5. Shop for a VA lender and get pre-approved
6. Hire a real estate agent that’s VA-savvy
7. Choose a property that’s VA-approved
8. Close the deal only when you’re ready to move in