What is a VA Loan and How Does It Work?

When shopping for a mortgage knowing your options can make a heap of difference. 

For military borrowers, a VA Loan the best option on the market. Since 1944, VA Loans have helped more than 24 million veterans or service members purchase their homes. 

VA Loans

A VA Loan is a mortgage option offered through private lenders and guaranteed by the Department of Veterans Affairs. With the backing of the Department of Veterans Affairs, qualified borrowers are able to secure loans with 0% down on their primary residence or when refinancing their home. 

VA Loans a different from conventional mortgages that often require up to 20% down. While the Department of Veterans Affairs doesn’t make loans, it does back a portion of each loan for qualified buyers. This guarantee allows private lenders to mitigate risk and offer loans for 0% down and with other superior terms–including not needing to carry mortgage insurance. 

How Does It Work? 

If you’re interested in a VA Loan, here are the steps you can take: 

1. Get Prequalified. 

Once you find a lender that offers VA Loans, get preapproved with your lender. This way you’ll know how much house you can afford. Lenders will also help you walk through the rest of the process. 

2. Preapproval. 

After you’ve qualified, you’ll need to get approved. That way, when you find a home that’s right for you, you’ll be able to begin the purchase process. Your lender will verify your financial information and give you a preapproval letter. 

3. Put in an offer. 

Once you’ve found your home, it’s time to put in an offer. Your real estate agent will be able to help you navigate this part of the process and ensure that the lines of communication between buyer and seller are kept open. It’s best to have an agent who is familiar with VA Loans. 

4. Go through underwriting. 

Your offer is accepted! Now it’s time to go through the VA process. Once you are under contract, your lender will order a VA appraisal of the property to determine its worth. If the property is up to code and passes inspection and your financial affairs are in order, you’ll be issued a clear to close. 

5. Closing. 

The final step is putting pen to paper. At closing, you’ll sign all the documents and finish the process. 

Congratulations! You’re a homeowner with a VA Loan! 

Still have questions about VA Loans or searching for a lender? First Lenders is ready to start your preapproval process!