Financing Your Dream Home: How Military Servicemembers Can Find the Best VA Loan Lenders

Andrew Reyes

Buying a home is one of the most significant purchases you’ll ever make in your entire life. Finding a home and optimal financing can be a nightmare, especially for first-time homebuyers. Even after the second or third time, it is still highly stressful. As a military member, you may qualify for a Veterans Affairs loan. VA loans are one of many benefits offered to military servicemembers.

Like any mortgage agreement, however, you must find the best VA loan lenders to ensure you receive the best deal and terms.

house key chain titled va loan lenders

What Is a VA Loan?

A VA loan is a mortgage available to current service members, veterans, and surviving spouses. The U.S. Department of Veterans Affairs established the program to help people buy homes. The loans are offered through private lenders but backed by the federal government.

VA Loans Explained

Before you seek a VA loan, it helps to understand the ins and outs of what a VA loan is and how it can benefit you.

Types of VA Loans

The types of loans available to you include:

  • Purchase loans
  • Interest rate reduction refinance loan
  • Adapted housing grants
  • Native American Direct Loan Program

The interest rate reduction refinance loan allows you to obtain a lower interest rate on your current mortgage. The adapted housing grant helps veterans with service-connected disabilities purchase or build an adapted home. Additionally, service members with disabilities can use the loan to modify an existing home.

With the NADL program, Native American veterans can purchase, construct or improve homes on Federal Trust Land.

Benefits of VA Loans

There are various benefits to seeking the best VA loan lenders over a traditional mortgage. Since the VA guarantees your loan, banks and mortgage lenders can offer you financing with little to no downpayment. In addition, the VA loan program has a guaranty on loans up to $453,100. If you live in a high-cost area, you may be able to obtain a higher guaranty.

The VA imposes limits on closing costs and fees. You can ask sellers to pay all your loan-related closing costs and up to four percent of insurance, collections, judgments, and prepaid taxes. You can utilize a cash-out refinance to repair, remodel, or use however you want. When you refinance your home, you do not have to requalify but can still obtain a lower mortgage.

If you choose to pay off your loan early, you do not have to worry about prepayment penalties.

Eligibility Explained

There are various ways to become eligible for a VA loan. When applying for funding, you must consider your service record and your financial health.

Service Record

While lenders may have custom requirements, VA loans have lenient credit requirements. While many service members do qualify for a VA loan, not all do. To qualify, you have to meet at least one of the following requirements:

  • 90 consecutive days of active service in wartime
  • 181 days of active service in peacetime
  • More than six years of service in the Reserves or National Guard or, under Title 32, 90 days with 30 consecutive days

Likewise, if you are a spouse of a service member who lost his or her life in the line of duty or because of an injury connected to his or her service, you can qualify for a VA loan. However, if you remarry, you cannot receive a VA loan.

Financial Health

Before applying for funding, you must have the right property to qualify. VA loans work on houses, condos, and manufactured homes. The VA requires you to be in the residence within 60 days of the initial purchase. There is no specific credit score, but different lenders set credit scores specifically for VA loans.

As with purchasing properties through other sources, the best VA loan lenders will analyze your debt-to-income ratio. While the VA will not limit your DTI, the lender can.

Most lenders will require you to have some money in your bank that you do not use for the upfront costs. The money in your bank guarantees that you can make payments as soon as the loan closes. A good reserve is about two months’ worth of mortgage payments.

How Can You Obtain a VA Loan?

Buying a house can be a stressful decision, but a VA loan is ideal for service members who want less stress and better overall terms.

Seek Out a VA-Approved Lender

The U.S. Department of Veterans Affairs will not let you borrow from any lender. The VA has specific lenders who have been approved to offer VA loans. In addition, different lenders may have different qualifications. For example, some lenders work almost exclusively with the Department of Veterans Affairs and service members.

These lenders tend to have more extensive knowledge. Other general lenders may provide conventional loans but occasionally offer VA loans.

Receive a COE

Before you can be approved for the money, the best VA loan lenders have to verify that you meet all of the qualifications. The financial institution can help you obtain a Certificate of Eligibility. The COE also helps the institution find out how much money you could qualify for and the amount guaranteed by the U.S. Department of Veterans Affairs.

To obtain your COE, bring with you information about your military service. Some lenders have an online portal where they can acquire the COE instantly. If you cannot obtain your COE online, you may have to wait to receive it by mail.

Prequalify for a Loan Amount

You do not have to prequalify for a loan amount if you don’t want to, but it tends to make the whole home-buying experience easier and more efficient. The prequalify, you discuss your credit history, income, employment, and marital status with the lender. Before you go through the process, find out your credit score. When you provide thorough information, you don’t have to worry about surprises during the underwriting process.

After prequalifying, the lender will give you a letter that provides you with a price range. You can use the price range to hunt for a home. Keep in mind that the price range does not guarantee the approval of a loan.

Find a House

Once you have the preapproval, you can start the househunting process. Try to find a real estate professional who works with other military service members. Real estate agents that understand the process can help you take advantage of your benefits. They can also warn you away from any mistakes that you could make during the process.

Finish a VA Appraisal

To obtain a VA loan from one of the best VA loan lenders, your new home has to undergo an appraisal. The appraiser has to be someone certified to perform the appraisal within the VA’s standards. The appraiser verifies that the home you want to purchase is worth the price you agreed to pay for it. In addition, he or she inspects the home to ensure there are no code violations or defects with the property.

Close the VA Loan

Once the underwriter approves you for the loan, you can close and start the move-in process. Closing transfers the property to you. During closing, you sign the documents to confirm you agree to the terms of the loan. During closing, you provide proof of insurance and pay any closing costs you agreed to.

7 Best VA Loan Lenders

Finding the right lender to finance your home purchase can be one of the most stressful aspects of the process. You do not want to choose a lender that will surprise you with fees or deny you based on your credit score. The following are the top seven best VA loan lenders.

Navy Federal Credit Union

The Navy Federal Credit Union provides two different types of mortgages. You can choose between the HomeBuyers Choice Mortgage and the Military Choice Mortgage. These mortgages are for first-time homebuyers or those who do not meet the minimum requirements for a VA loan.

When you are a member of the Navy Federal Credit Union, you also receive discounts on home security systems, asset protection programs, car, life, and home insurance. The Navy Federal Credit Union serves members in all 50 states, Guam, Puerto Rico, Spain, Germany, Italy, the U.K., and Okinawa.

USAA

The USAA is one of the best VA loan lenders because it does not charge any fees aside from the VA-mandated origination fee. In addition, USAA will pay for your title, appraisal, and the VA funding fee, if you receive a streamlined mortgage, or refinance loan. The USAA can also offer VA jumbo loans up to $3,000,000.

If you work with a real estate agent within the Navy Federal RealtyPlus Network, you can get $9,000 cashback. You do not have to put a down payment on your home loan and can lock in your rate. Unfortunately, you do not see any customized rates before you apply.

Veterans United Home Loans

Veterans United offers all mortgage loan products available through the VA loan program except for home equity loans and HELOCs. In addition, if you want to borrow extra money to pay for solar heating, storm and thermal windows, or cooling systems, Veteran’s United has energy-efficient mortgages.

Veteran’s United offers an online application process and instant employment and income verification. If you’re concerned about your debt-to-income ratio, Veterans United will approve ratios up to 60%. To seek approval, you must have a credit score of 620.

Quicken Loans

When you use Quicken Loans, you have access to over 3,000 mortgage brokers. To apply for a mortgage, you have the option to fill out an online loan application or call to speak with a loan officer. When you do speak with a loan officer, you speak with the same person throughout the duration of the process.

You have a full selection of custom fixed rate VA home loans but cannot expect to have home equity loans or HELOCs. Through Quicken, you have no underwriting or documentation fees and have access to the USAA Real Estate network. The credit score to qualify is 620.

Veterans First Mortgage

Many people appreciate the convenience of online loan accessibility. Veterans First Mortgage is one of the best VA loan lenders because of its convenience and efficiency. For example, if you are a service member overseas, you may not be able to come to the office in person. Instead, you can fill out and track the loan application and upload documents online. You can also sign important documents for your VA loan.

The Veterans First Mortgage lender network provides access to various financial products and debt relief programs. They have around 1,500 potential lenders for you to work with and can provide you with competing quotes.

AmeriSave Mortgage

AmeriSave Mortgage claims to have financed more than 390,000 homes since 2002. As an online lender, you have an opportunity to fill out the paperwork online and to work with your lender without having to go to the office. The loans are available in 49 states, including Washington D.C. You will complete most of your application process online.

Additionally, you can prequalify for a loan without worrying about a hard credit inquiry harming your score. Keep in mind that AmeriSave does not offer home equity loans or HELOCs.

Bank of America

Bank of America offers a variety of loan options, including VA loan products. Bank of America has an extensive online dashboard and provides competitive rates and fees. For those seeking a VA loan, you must have a credit score of 620. The lender also offers down payment and closing cost assistance, along with discounts if you happen to be a Bank of America customer.

Keep in mind that if you want to refinance through the VA, you have to be an existing Bank of America customer to use their services.

Learn How To Find the Best VA Loan Lenders To Secure Your Future Financial Health

For members of the military, VA loans are an ideal option when purchasing a home. If you want to secure your financial future and find the home of your dreams, consider looking into options from some of the best VA loan lenders. Check us out for more guides on how to secure your financial future.

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