Do I Need Prior Approval for My VA Loan? A Veteran Homebuyer's Guide

In this guide, we'll explain how the VA loan process works, especially for loans that need this extra step. Our goal is to make it easy for you to understand everything about getting your loan approved.

What Does Prior Approval Mean for Your VA Loan?

Prior approval in VA loans is like getting a special green light from the VA before your loan can go through.

It's a way for the VA to examine certain loans closely to ensure everything is in order. Not all VA loans need this, but it's an important step for those who do.

Knowing which loans require prior approval is key because it helps you plan and avoid surprises during your home-buying journey.

This step ensures your loan meets all the VA's requirements, smoothing the path to your new home.

Which VA Loans Need Prior Approval?

Not all VA loans are the same. Some need an extra check from the VA, known as prior approval. This is crucial for specific types of loans to ensure they meet all the VA's guidelines.

Let's dive into each loan type that requires this additional step.

Joint Loans with Non-Veterans

These are loans where a veteran partners with someone who isn't a veteran and isn't their spouse to buy a home. The VA wants to ensure that the veteran's benefits are correctly used in these cases.

Loans to Veterans with a Nonservice-Connected Pension

Veterans receiving a pension from the VA for reasons not connected to their service might also need prior approval. This ensures that their financial situation supports taking on a new loan.

IRRRLs for Delinquent Loans

If you're looking to refinance with an Interest Rate Reduction Refinance Loan (IRRRL) but your current loan is delinquent, you'll need prior approval.

The VA checks to ensure the new loan is a good move for you and that any issues causing the delinquency have been resolved.

Manufactured Home Loans Not Titled as Real Estate

Buying a manufactured home with a VA loan is a bit different, especially if the home isn't considered real estate. These loans require a closer look to ensure everything aligns with VA standards.

Supplemental Loans for Home Improvement

If you plan to use a VA loan for home improvements, this also falls under the category needing prior approval. It's a way for the VA to ensure the improvements are necessary and will add value to the home.

How Long Does Prior Approval Take for VA Loans?

Every day counts when you're waiting for prior approval on your VA loan. The good news is that the VA has a set goal: they aim to give you an answer within 10 business days.

This quick turnaround is part of their commitment to helping veterans buy homes without unnecessary delays.

The VA works hard to review your loan within this timeframe, but there are ways you can help speed things up:

• Get Your Documents in Order: Before you submit them, make sure you have all the required documents ready and in the right order. This can prevent any back-and-forth that might slow things down.

• Stay in Touch: Keep in contact with your lender and the VA. Quick responses to any questions they have can keep the process moving smoothly.

• Understand the Requirements: Knowing exactly what's needed for your specific type of loan can prevent delays. Ask your lender or VA loan officer for guidance if you're unsure.

By following these tips, you can help ensure your loan application moves through the process as swiftly as possible, getting you closer to your goal of homeownership.

How Do I Submit a VA Loan for Prior Approval?

Getting prior approval for your VA loan involves a few specific steps. This process ensures your loan meets all the VA's requirements.

Here's how you can navigate this crucial part of your home-buying journey and the importance of working closely with your Regional Loan Center.

Identify the Need for Prior Approval

First, determine if your loan type requires prior approval.

This includes joint loans with non-veterans, loans to veterans with a nonservice-connected pension, IRRRLs for delinquent loans, manufactured home loans not titled real estate, and supplemental loans for home improvement.

Gather Required Documents

You'll need a specific set of documents depending on your loan type.

Common requirements include a cover letter explaining the need for prior approval, Form 26-8937 (Verification of VA Benefits), Form 1003, proof of income (VOE or pay stubs/tax returns), and other relevant documents.

Submit to Your Regional Loan Center

Once you have all your documents, submit them to your area's VA Regional Loan Center. The submission can often be done electronically through the VA's WebLGY system.

Follow-up

Contact your Regional Loan Center to address any questions or additional requirements after submission. This can help ensure a smooth and timely review process.

What Documents Do I Need for a VA Loan Purchase or Cash-Out Refinance?

When applying for a VA loan purchase or cash-out refinance that requires prior approval, you must provide specific documents. Each piece of documentation is crucial in the approval process, helping the VA assess your loan's eligibility.

Here's a breakdown of what's needed and why each document matters.

• Cover Letter: This should include the reason for prior approval, the underwriter's contact information, and the underwriter’s manager’s contact info. It sets the stage for your application by summarizing your request and providing direct contacts for any queries.

• Form 26-8937, Verification of VA Benefits, verifies your eligibility for VA benefits and ensures you qualify for the loan benefits you're applying for.

• 1003, Signed and Dated: Also known as the Uniform Residential Loan Application, this form provides a comprehensive look at your financial status, employment history, and personal information, giving the lender a clear picture of your borrowing capability.

• Written VOE (Verification of Employment) or Pay Stubs, Tax Returns, etc.: These documents prove your current income and employment status, which helps the lender assess your ability to repay the loan.

• CAIVRS: A government database check ensures you do not have any outstanding debts with the federal government that could affect your loan eligibility.

• VOD (Verification of Deposit) and Bank Statements confirm your financial assets, showing you have the necessary funds for any required down payment or closing costs.

• Form 26-6393, Loan Analysis, Signed: This form breaks down your loan's terms and your financial situation to ensure it is suitable for you.

• Form 26-0592, Counseling Checklist for Military Homebuyers (if applicable): This checklist ensures that active-duty military personnel have received the necessary counseling on their home purchase.

• Loan Estimate: Provides detailed information about the loan you're applying for, including interest rates, monthly payments, and closing costs.

• Energy Efficiency Improvement Documentation (if applicable): If you include energy efficiency improvements in your loan, this documentation outlines the improvements, expected costs, and benefits.

• Other Necessary Underwriting Documents: This may include loan payoff statements, Power of Attorney (POA), Verification of Rent (VOR), and any other documents specific to your situation.

FAQ Supplementing the VA Loan Prior Approval Guide

Understanding the intricacies of VA loans requiring prior approval can raise several questions.

While our guide aims to clarify the main process and requirements, here are additional FAQs to help you navigate the less obvious aspects of your home-buying journey.

Can I expedite the prior approval process for a VA loan?

If you're in a tight spot and need your VA loan to move faster, communicating this to your lender and the VA might help.

While the standard is ten business days, preparing documents and ensuring swift responses to VA inquiries can minimize delays.

What happens if my loan doesn't get prior approval?

If your loan is not approved, the VA or your lender will explain why.

This feedback is crucial as it guides you on what needs to be addressed, whether resolving debt or correcting documentation errors, to re-apply successfully.

How does my credit score impact the prior approval process?

While VA loans are known for their lenient credit requirements, a good credit score can still smooth the process. It reassures lenders of your financial reliability, potentially affecting the loan's approval and terms favorably.

Can I switch lenders after getting prior approval?

Yes, you can switch lenders after receiving prior approval, but you'll need to inform the VA and possibly submit a new application, depending on the lender's requirements.

This might reset the approval timeline, so weigh this decision carefully.

Is it possible to apply for prior approval with more than one property in mind?

The prior approval process is generally specific to one property and loan application. If you're considering multiple properties, discuss your situation with your lender to understand how to approach this best.

How does a change in employment affect my VA loan prior approval?

A significant change, like a new job, can impact your loan application. You'll need to provide updated employment documentation and possibly undergo a revised assessment of your ability to repay the loan.

What if I find a mistake in my loan application after submitting it for prior approval?

If you discover an error in your application, contact your lender immediately to correct the mistake. Prompt action can prevent delays or complications in the approval process.

Can I include the cost of energy-efficient upgrades in my VA loan?

Yes, energy-efficient improvements can often be included in your loan amount, subject to approval. Documenting these planned upgrades and their costs is essential for consideration in the loan application.

How do I find my Regional Loan Center for submission?

Your Regional Loan Center can be located through the VA's official website. Selecting the center closest to you ensures you get localized assistance tailored to your area's requirements.

What role does my lender play in the prior approval process?

Your lender is a crucial intermediary in the VA loan process. They collect your documentation, submit the application on your behalf, and communicate with the VA.

A responsive and knowledgeable lender can significantly influence the smoothness of your application process.

Bottom Line

VA loans are a great way for veterans to buy a home, but sometimes, you need prior approval. This means the VA checks your loan more carefully to ensure everything is okay.

We wrote this guide and added some extra questions and answers to help you understand how it works. Knowing about prior approval can make a home loan easier and less stressful.

If you need more help or have more questions, MakeFloridaYourHome is here to help you every step of the way.