Last Updated on January 16, 2023 by Bob Filipczak
If you are investigating the VA loan pre approval process, you’re ahead of the game. Pre approval has become a vital part of finding and purchasing a home, especially in a competitive real estate market. It shows your buyers that you are ready, you’ve done your homework (no pun intended), and any offer you make on a property is legit.
When you are working to get a VA home loan pre approval, it’s important to understand that you need to advance on two fronts. The VA loan system is a team effort between the U.S. Department of Veterans Affairs and a VA-approved private lender. On one side you have the VA loan system, who insures and guarantees your loan. The VA does not, and we repeat not, issue the loan. They stand behind you and show the private lender that you are a good risk for a mortgage. It’s a bit like having a cosigner on your loan, but stronger.
The private lender, bank or mortgage broker does a lot of the heavy lifting in this process. They actually give you the loan, pre approve you for the loan, and service your loan for the next 30 years (or 15, depending on your mortgage). In some cases, your VA-approved lender will be working with the VA to get all the approvals and documents lined up.
Finding the right private lender is vital. Homes for Heroes has gathered a network of private mortgage lenders and brokers who are committed to working with veterans, active duty service members of the military and other community heroes. We can help you find and connect with mortgage specialists who know the VA loan process and who want to help you because of your service to the country.
Right up front, it’s a good idea to keep it straight and know what you need from each side of the process.
What the VA Does for VA Loan Pre Approval
Getting pre approved for a VA home loan means acquiring documents. The one you will hear most about is the COE (Certificate of Eligibility). The good news is, while you do need this important document to complete your application, it is not difficult. It’s just a one page form and it’s online.
The Certificate of Eligibility is exactly what it sounds like: it verifies to the VA loan processors and your private lender of your VA loan eligibility.
There is also a shortcut. If you’ve already got a private lender ready to work with you on your VA Loan, they can request a Certificate of Eligibility directly from the Department of Defense. There’s an online system called Web LGY that has this information online and it can be immediately downloaded. You can also do it yourself by using the VA’s eBenefits portal.
One point to remember is that the Certificate of Eligibility is not the same as an approval for the VA loan–but it’s close. Once you’ve got it, your lender and the VA will work out the rest of the details of the mortgage loan. You don’t need to be involved.
So the order is: Get your COE, get the loan approved by the private lender and then the VA will guarantee the loan. Simple, sort of.
Active Duty Statement of Service
There’s one hitch. If you are an active-duty service member and working toward a VA pre approval, you will also need an Active Duty Statement of Service. This is a document that helps the private lender determine that you have the income needed to make your monthly mortgage payments. Rather than a form or certificate, this is a letter from your commanding officer. There are samples out there of this letter so your commanding officer doesn’t need to create it from scratch.
These are the facts he or she will need to include in the statement/letter:
- Your name and Social Security number
- Your date of birth
- Which branch you served
- Your rank
- Your dates of active duty
- List of any time lost
- Type of discharge
- Are you eligible to return to service
- Name and signature of commanding officer
Pre Approval Process and the Role of Your Private Lender
So that’s what you need for the VA part of the loan pre-approval process. The rest of it comes from your work with your private lender. To get a VA mortgage pre approval, you need to submit a loan application and go through the mortgage pre-approval process. This takes time and effort to assemble and submit all of the necessary paperwork to your lender. Moreover, your lender will need time to conduct their evaluation. Here are the steps:
- Fill out the mortgage application for your lender
- Send them all required documentation
- The lender evaluates your documents
- The lender will provide you an estimate of how much you can borrow
- The lender gives you a pre-approval letter
Why jump through all of these hoops? Because with that last step, you will have a pre approval letter, and that means you are ready to make serious offers on houses you want. That can make all the difference and give you an edge in a competitive real estate market.
Pre Approval Documents You Will Need
Your lender will likely ask you to assemble a sizable list of documents and information you will need for your mortgage pre-approval:
- Typical information such as your full name, date of birth, address history, marital status, dependents, years of school attended, etc.
- Get a copy of your resume because they will want your employment history.
- Bring your Drivers License or State ID Card, or a copy of it.
- Your Social Security Number
- What type of loan you are looking at. In this case it’s a VA loan but they will also want to talk about the length of time and interest rate schedule for your mortgage.
- A private lender will typically ask about your down payment, but with most VA home loans, there is no down payment necessary (with a few rare exceptions).
- The private lender will do a credit check and will have a minimum credit score they are looking for.
- Bring last year’s tax returns. Some lenders might ask for the last two years.
- They will want to see your bank statements, typically the last two months.
- If you’ve got retirement or investment savings, they will want to see statements for the past quarter, including:
- 401k statement for retirement accounts
- W-2 Forms for the last year.
- Your two most recent pay stubs.
- Bring evidence if you have rental property income.
- They will want a record of your debts, things with monthly payments – student loans, car loans, credit cards.
- If you currently have a mortgage, your lender will want your most recent statement, the declaration page of the homeowners and mortgage insurance, a statement of your property taxes and any homeowners association dues.
- If you are currently paying rent, bring information about your payment over the last 12 months, and your landlord’s contact information.
- If you are divorced, bring the divorce decree and a record of any child support or alimony payments.
As we said, it’s worth getting all of this together so you have that VA pre approval letter in your hand when you go looking for a home.
VA Loan Pre Approval is Not the Same as Pre Qualification
If you’ve read about VA home loan prequalification for a mortgage, you might have it confused with pre approval. They are not equal. Pre-approval is a stronger, more reliable estimate. As you’ve seen, getting pre-approved for a home loan requires a closer look into your finances. This process will likely uncover any potential issues you may not be aware of and that’s a good thing to learn before attempting to borrow a large amount of money.
The pre-qualification process is not as thorough because it commonly relies on the assembly of self-reported information. It typically does not include pulling your credit report or reviewing financial documents. The lender will collect some basic financial information to determine how much you may borrow to purchase a home. The lender will provide you with a prequalification letter, but the prequalification letter is less valuable than a pre-approval letter because a lender has not yet verified your financial information.
In the current market, if you’re a serious buyer, you should try to get the pre-approval letter. It will make a difference with sellers.
Homes for Heroes: Your Network of Real Estate Specialists
“Homes for Heroes is a great program. We are both veterans and we felt extremely well taken care of in the process.” – Cheryl, with the Navy, found a home in North Carolina.
Homes for Heroes began more than 20 years ago as a way to thank community heroes, including veterans and military personnel, as they entered the real estate market to buy a home. The thank you check at the end of the home buying journey is part of it. The average Hero Reward check given to our heroes after closing on their home is $3,000.
But we wanted to help heroes at all stages of the home buying journey, so we connect you with our local real estate and mortgage specialists who will help you start and refine your search navigate the VA loan pre approval process.