Serving our country is one of your greatest accomplishments and you deserve a little recognition. That’s why the government created the U.S. Department of Veterans Affairs to handle specific details, including home mortgages, to make your life a little bit easier. And, it’s easier to understand who qualifies for a VA loan than it is to interpret how it all works.

So, how does a VA loan work?

It all starts with the decision to buy a home. Once you’ve laid out your plans for purchasing a home, you can get started on the rest of the process. Of course, you’ll also need to decide what type of house you want to buy and where depending on your personal preference and maybe even where you’ll be stationed, if you’re still on active duty.

Here are a few things you should know about the VA loan process.

How Does a VA Loan Work?

Veterans home loans were designed to assist veterans with purchasing and refinancing their homes. These programs require less conformity than a conventional loan and are therefore much easier to obtain as long as you’ve served, are serving, or are currently disabled due to active service in the United States Military. Widows of veterans are also eligible to qualify for VA home loans.

Understanding the process of obtaining a VA loan should help you navigate your purchase a little easier. Keep reading to learn more about what you should be doing to secure a VA loan and close on your new home.

Find a Real Estate Agent

The first thing you need to do before getting pre-approved for a loan is to find a good real estate agent that specializes in VA loans. He or she can help you find a home as well as help you understand the loan process to make things easier. You’ll also benefit from using a real estate agent in negotiating terms and the total cost of the home you intend to purchase.

The best method for finding a real estate agent you can trust is to ask for referrals from family, friends, and co-workers. You can find real estate agents anywhere, but finding one that you can trust is what really counts.

Locate a Lender

With your real estate agent, you can locate a lending institution that specializes in veterans affairs home loan programs. This is the step when you will get pre-approved which indicates how much house you can afford according to your income and credit that will be verified with the lender. It’s important to note that lenders set their own interest rates, so it’s a good idea to shop around with different lenders until you find one that suits your needs best.

Certificate of Eligibility

One of the VA loan requirements you’ll need to provide is a Certificate of Eligibility from the Department of Veterans Affairs. Your real estate agent can assist you in obtaining this documentation.

This certificate verifies that you meet the eligibility requirements for a VA loan to the lender before you begin shopping for a home.

Home Shopping

If this is your first time buying a home, then you may have some questions about how to buy a house. The main thing to consider is location, of course. You can research the neighborhood and schools ahead of time but it’s always a good idea to know what you’ll be looking at when you start shopping.

Look for homes within your budget that fulfill the requirements you have for a home. For example, if you need a garage, don’t bother looking at houses without one. Also, consider what types of details you’re willing to budge on such as how many bathrooms a house has or how big the kitchen or living room is.

Sign a Purchase Agreement

Once you find the home you want, it’s time to sign a purchase agreement for the home so you can get started on the loan approval process. This is when your real estate agent will negotiate a price on the home and write up the purchase agreement for you and the seller to sign. Make sure your agreement has a ‘VA Option Clause’ which ensures that you won’t incur any penalties or forfeiture of earnest money if the loan falls through.

You can also ask that your purchase agreement includes an ‘escape’ clause which allows you to withdraw from the contract without penalty.

Apply for Your VA Loan

Now that you have a home ready to secure, it’s time for the loan process. You will need to provide organized and sufficient information to your lender including pay stubs, bank statements, and other requested documentation. Your lender will also perform a hard credit inquiry on your credit report at this time in order to ensure that you qualify for the loan you are trying to obtain.

Loan Processing

Loan processing takes anywhere from a few days to a few weeks depending on specific factors within your home loan. The lender will request an appraisal of the home and review all of your documentation including income and assets before making a determination on the loan.

Closing and Fees

Once your loan is approved, it’s time to close. You will be responsible for any real estate agent fees, lender fees and a one-time funding fee ranging from 2.15 percent to 3.3 percent depending on the loan amount. Your funding fee may also be determined by other factors including whether or not you’ve received VA funding in the past and you can reduce this fee by up to 1.25 percent with a 10 percent down payment or more.

Final Thoughts

VA home loans are generally easier to obtain than traditional or conventional loans. Even if you have a blemished credit history including foreclosure, you can still qualify for a VA home loan. Just make sure you have all of your financial paperwork in order before you start the process to make things easier on you and your agent as well as the lender that will be reviewing your loan.

If you’re still wondering, how does a VA loan work, then don’t hesitate to contact the U.S. Department of Veterans Affairs for more clarification. This should be enough to get you started and help you understand what further questions to ask.