The home loan program administered by the Veteran's Administration provides loans to eligible veterans and active duty military personnel. A financing guarantee on up to 100 percent of the sale price of a home is provided by the Administration. Eligible veterans and active duty personnel must apply to a private lender who makes a determination about the loan. The guarantee, which protects the lender against defaults, allows the lender to accept the risk associated with financing 100 percent of a home's sale price. The guarantee helps the veterans because they do not have to pay a down payment.
Step 1
Select a home in the area you wish to live. Although there are specific homes that advertise as VA approved, the veteran may choose any home in any area. The house will have to meet certain inspection and value criteria. You are responsible for securing a home inspection that lists in detail anything that is wrong with the house before you make an offer on the home.
Step 2
Sign an agreement with the home owner that contains a VA clause. A real estate agent will have this agreement for you. The VA clause in a purchase and sales agreement specifies that the veteran can cancel the contract without penalty if the VA loan is not obtained.
Step 3
Choose a private lender. The lender will ask you to complete applications for the loan and a certificate of eligibility for the guarantee. The lender will sets the interest rate, any discount points and the closing points.
Step 4
Wait for the lender to gather all of your income and credit data. He will also order a Veteran's Administration appraisal of the property. After all the information is received, a decision will be made to approve or decline the loan. Once the loan is approved, the lender will choose a title company or a lawyer to administer the closing and the transfer of ownership to the veteran or active duty person will occur.
Tips and Warnings
- If you have any questions about the home loan process, you may contact your Veteran's Administration representative at any point. You will still have to meet income and credit qualifications to receive a home loan.
- You will be charged an up-front Veteran's Administration funding fee. This fee may be financed as part of the loan. A veteran who receives monthly disability benefits for a service related disability will not have to pay this fee. The VA appraisal is conducted by a third party contracted by the Veteran's Administration. This appraisal is for the estimated market value of the home at that time. It is not the same as a home inspection and does not add or deduct for cosmetic details.
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