VA Loan Process

VA Loan Process And Eligibility Requirements On VA Mortgages

ByGustan Cho

This BLOG On VA Loan Process And Eligibility Requirements On VA Mortgages Was UPDATED On November 5th, 2018

The VA Loan Process is similar like other mortgage loan programs:

  • However, there are few extra steps in the VA Loan Process
  • This is because VA Loans are limited to Veterans with Certificate of Eligibility
  • VA Loans is the best loan program in today’s market
  • Unfortunately, VA Loans are only limited to Veterans with Certificate of Eligibility
  • The Certificate of Eligibility is often referred to as COE

In this article, we will discuss and cover the loan process of VA mortgages.

What Is A Certificate Of Eligibility And How Does It Play In The VA Loan Process?

The very first stage in the VA Loan Process for borrowers is to locate the COE, or Certificate of Eligibility.

  • The Certificate of Eligibility is what determines the Veteran’s qualification requirements for a VA and documents and verifies the Veteran’s military past and career

For a Veteran to be eligible for a Certificate of Eligibility from the United States Department of Veterans Affairs or VA are the following:

  • The Certificate of Eligibility is proof that the borrower is a veteran
  • The COE determines the eligibility and depends on the category of the Veteran’s service
  • In order to get a COE, the veteran needs an honorable discharge from the United States Armed Services

How Can I Get My Certificate Of Eligibility?

The mortgage loan originator will often assist with getting Certificate of Eligibility for borrowers during VA Loan Process.

Here are the ways of going about getting your Certificate Of Eligibility:

  • Visit the United States Department of Veteran Affairs  eBenefits portal
  • However, the best way to get it is by having a loan officer assisting
  • Loan Officers do have accessibility to the VA-Guarantee Home Loan System Online Portal
  • Borrowers can also go COE snail-mailed to after filling out VA Form 26-1880 Request for a COE

Then send the form and the required supporting documents to the United States Department of Veterans Affairs.

The Pre-Approval Stage Of The VA Loan Process

The Pre-Approval Stage is the most important stage of the VA Loan Process:

75% of our borrowers who contact us at Gustan Cho Associates are the following:

  • folks who either are going through a stressful mortgage process
  • or have recently gotten a last-minute mortgage loan denial due to one reason and one reason only
  • That reason is that they were not properly qualified by their loan officer prior to being issued a pre-approval letter

Borrowers should make sure that their loan officers have properly pre-approved them before they go out and get an executed real estate purchase contract.

The following steps need to be taken by a loan officer before issuing a pre-approval letter on a VA Loan:

  • Thoroughly review the mortgage loan application
  • Thoroughly review credit scores, payment history, and overall credit report
  • Make sure borrower does not have any credit disputes
  • Make sure to check and double-check with loan officer lender’s overlays
  • VA Loans do not have minimum credit score requirements
  • Check to see if the lender has its own overlays
  • VA Loans do not have a maximum debt to income ratio requirements
  • Make sure the loan officer lender does not have lender overlays on debt to income ratios
  • Make sure you run the mortgage loan application through the Automated Underwriting System and get approve/eligible per DU FINDINGS
  • There is no reason why a VA Loan should not close with a solid pre-approval letter

The Home Buying Stage Of The VA Loan Process

What is the stage of buying a home in the VA loan process

With a solid pre-approval letter by issue by a loan officer, homebuyers can now shop for a home. Can enter into a real estate purchase contract. Realtors will show homes. Once buyers find a home they want to purchase, the realtor will submit an offer to the sellers real estate agent, or the listing agent.

Here is how the home purchase stage works with the VA Loan Process:

  • Pre-Approval Issued
  • The Realtor will submit real estate purchase offer to the listing agent with contingencies
  • Contingencies include appraisal contingencies, home inspection contingencies, finance contingencies
  • VA allows up to 4% sellers concessions by the home seller for the home buyer to use it for closing costs
  • This is part of the negotiations
  • Most times, sellers will give sellers concessions

With no down payment requirement and sellers concession, buyers can purchase a home with no money out of pocket with a VA Loan.

The VA Mortgage Loan Process

Once you are armed with an executed home purchase contract signed by you and the home seller, the real VA Loan Process is about to start.

Here are the docs required during the VA Loan Process:

  • Executed Real Estate Purchase Contract
  • 2 Year Tax Returns
  • 2 Years W-2s
  • 30 days paycheck stubs
  • Certificate Of Eligibility
  • 60 days bank statements
  • Other Mortgage Documents click on the link to see the comprehensive list of docs required to process your VA Loan

VA Loan Process And Underwriting

A mortgage loan processor will be assigned to process the VA Loan.

  • The role of a mortgage processor is extremely crucial
  • It is the processor that makes sure that there is no missing information
  • Make sure that all documents are complete with no missing pages
  • A file that is not complete will get kicked back from the underwriter
  • The whole process needs to get restarted again
  • The processing of a mortgage file is what takes the longest
  • Most experienced mortgage processors will not submit any incomplete files to an underwriter

Once a mortgage processor deems that a file is complete and to her satisfaction, the processor will then turn the file to a mortgage underwriter for a VA Loan Approval.

The VA Underwriting Loan Process

The underwriting stage of the VA Loan Process is the stage where the Loan Approval is issued. It is the most exciting time of the VA Loan Process. The Underwriting VA Loan Process is where the decision is made of whether the borrower gets a loan approval or a loan denial.

Here is what mortgage underwriter considers when looking for a file and issuing Loan Approval:

  • Does the borrower meet all of the VA Guidelines?
  • Does the borrower have the ability to repay the VA Loan?
  • Is the borrower employment likely to continue for the next three years?
  • Has the borrower demonstrated good past payment history?
  • Good payment history is the best predictor for future payment on behalf of the borrower
  • If the borrower had prior bad credit and derogatory credit, has the borrower re-established his or her credit?
  • If the borrower has little or no credit and poor past payment history, does the borrower have strong compensating factors?

Once the mortgage underwriter has deemed that the borrower has met all VA Loan Requirements, the mortgage underwriter will issue a conditional mortgage loan approval.

Conditional VA Loan Approval

Once the mortgage underwriter feels confident about the borrower and sees that the borrower meets all VA guidelines, the underwriter will issue a conditional Loan Approval.

  • Conditional loan approval is when the underwriter will sign off on a clear to close once the conditions have been met
  • A clear to close or CTC is when the underwriter signs off on the loan
  • CTC is when the underwriter gives its blessing to send out closing docs to the title company and fund the Loan.

Here are examples of conditions from a conditional loan approval:

  • Updated bank statements
  • Updated paycheck stubs
  • Letters of explanations on recent credit inquiries and other derogatory credit items on credit report
  • Request additional documentation on the documents that have been provided
  • Final Verification Of Employment:
    • Most likely a verbal verification of employment
  • Proof of funds on cash to close

Role Of Mortgage Processor

The mortgage processor will be in charge of gathering all conditions:

  • The processor with work with the loan officer in gathering documents from the borrower and/or title company
  • Once the processor gathers all the conditions, the processor will submit the mortgage conditions in to the underwriter for a clear to close
  • Once a CTC, clear to close is issued by the mortgage underwriter, the file is ready for closing
  • The Closing Disclosure is prepared where it is then sent to the title company
  • The title company will gather figures required and docs from both the buyers’ side and sellers side
  • The title company will schedule the mortgage closing

Steps Leading To Mortgage Closing 

The closing is when the buyers and sellers gather and are normally scheduled in a title company.

  • The title officer is the quarterback of the closing
  • Title officer prepares all the docs prior to the closing date
  • The closing docs are signed and notarized
  • Funds are dispersed
  • Once the closing is over, the buyer gets the keys and the sellers get the proceeds from the sale

Here are the docs that will be signed:

  • Promissory Note of the mortgage
  • Deed of Trust is signed and the title company records the deed with the county
  • The Final Closing Disclosure is signed

Getting Pre-Approved For VA Loan

If you need to get pre-approved for a VA Loan with no lender overlays, contact Gustan Cho at 800-900-8569 or text for faster response. Or email us at gcho@gustancho.com. We specialize in VA Loans with no overlays. We have no credit score minimum requirements. We do not have any debt to income ratio caps on VA Home Loans. Gustan Cho Associates just go off the automated findings per Automated Underwriting Approval. We are available 7 days a week, evenings, weekends, and holidays.