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How To Find the Right VA Lender for You
By Stephanie Colestock MONEY RESEARCH COLLECTIVE
A VA loan is a home mortgage loan that’s guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans are some of the most valuable benefits available to those in the military and their families. These loans allow eligible borrowers to buy a home with zero down payment, no private mortgage insurance (PMI), and reduced closing costs and lender fees.
While some VA-direct loans do exist, most military members will need to take out a VA loan from an approved third-party mortgage lender. This means that although your new home loan will be secured by the VA, you’ll still need to shop around to find the best VA mortgage lender for you.
- Find an experienced VA lender
- Ask for referrals from friends or family
- Compare loan offers from multiple VA loan lenders
- Compare current mortgage rates
- Check fees and closing costs
- Find out how long the VA lender has been licensed
- Find out how many mortgages they issue per year
- How to find the right VA lender FAQs
1. Find an experienced VA lender
The first step in choosing the right VA lender is to find a mortgage company that issues many VA loans each year and has been offering VA-backed loans for a while. Their knowledge and experience will go a long way when it comes to simplifying the loan process.
Good VA loan lenders help streamline the application process, appraisal, and closing of your new mortgage and can also request a certificate of eligibility (COE) on your behalf if you don’t already have one. A COE tells you (and your lender) how much of your VA entitlement eligibility remains and how much of your new loan the VA is willing to secure.
An experienced lender can also help you navigate issues that may arise with your VA loan, such as a home that appraises for less than its purchase price. They can also walk you through underwriting if you have a unique or unconventional situation, or help you build the loan you need based on your mortgage payment or upfront-cost limitations.
2. Ask for referrals from friends or family
Rather than rely on reviews and ratings from strangers, ask the people you trust most!
Some of your best lender sources could be friends and family who have purchased a home with a VA loan recently or trusted real estate agents who handle VA borrowers on occasion. They’re probably more than happy to tell you about their experience, including the pros and cons of the lender they chose, and to provide some VA loan tips they learned along the way. In some cases, you and/or your friend could even get a referral bonus.
3. Compare loan offers from multiple VA loan lenders
Whether you’re taking out a conventional mortgage loan, an FHA loan, USDA loan, or a VA loan, you should always shop around and compare multiple private lenders. Doing so allows you to rate-shop, or compare the interest rates you’re offered from each lender, and see how much money you can save on points, fees, and closing costs.
Many lenders offer to prequalify you for your home mortgage loan based on limited personal and financial information. Prequalification isn’t a loan approval but does give you an idea of the rates and loan terms you might be eligible for with that lender. For most borrowers, it makes sense to get prequalified through multiple different lenders just to see what sort of loan options are out there. Prequalification also reassures sellers and real estate brokers that you are a serious prospective buyer
Even if you apply through more than one lender, your credit score isn’t likely to take a big hit. Most credit scoring models, such as the widely-used FICO score, allow for rate-shopping and will count all of your related hard inquiries as one, so long as they occur in a specific time period (usually 14 to 30 days).
4. Compare current mortgage rates
How do you know that the rate quotes you’re being offered are competitive? Take a hard look around.
You should look first at national rates for comparison purposes. As interest rates continue to climb, it can be difficult to identify those that are higher than normal, especially if you’re just starting your home mortgage search. Understanding what’s typical at this point in time — not six months or a year ago — is important.
Some lenders will advertise their current mortgage rates (or a range) based on the type of loan being offered, the loan amount, and the repayment terms you choose. Rates can also vary depending on whether you’re opting for a fixed-rate or adjustable-rate mortgage, or whether you meet the lender’s minimum credit score requirements.
Knowing this can help you home in on more competitive lenders or weed out those with higher-than-average interest rates, even before you apply.
5. Check fees and closing costs
After you apply for a mortgage loan, the lender is required by law to provide you with a Loan Estimate. While receipt of this three-page form doesn’t mean that your mortgage application is approved or denied, it will tell you how much you can expect to pay if you are approved by that lender.
A loan estimate spells out exactly how much the lender is charging in various fees and closing costs. These expenses — which can include credit checks, flood reports, title insurance, and more — may or may not be negotiable.
6. Find out how long the VA lender has been licensed
The longer your lender has been licensed, the more experience they could have with issuing VA loans. To verify their license and get additional information, you can run a check of your lender through your state’s financial regulatory agency.
It’s important to note, though, that the length of time a lender has been in business isn’t the only important factor. If they only issue a handful of VA loans each year, it doesn’t really matter how long they’ve been in business because their experience could be very limited. You should also keep in mind that just because the lender has been around for 50 years, that doesn’t mean that your individual loan officer shares that level of experience.
7. Find out how many mortgages they issue per year
The more experienced your mortgage lender is in issuing VA loans, the more familiar they will be with the VA loan process and the VA loan requirements. Experienced lenders and loan officers can offer valuable guidance as you move from application to disbursement.
You may want to look for a lender and a loan agent that issue numerous VA mortgage loans each year and work with a number of military families to ensure that you get the most experienced lender possible. VA loans are complicated. People who have a lot of experience with them can be a valuable resource whether you’re a first-time homebuyer or, later on, wondering how to refinance a VA loan.
How to find the right VA lender FAQs
Who is the best lender for VA loans?
When it comes to taking out a VA home mortgage loan, the best lender for someone else won't necessarily be the right one for you. To find the best lender for you, you'll want to consider factors such as the lender's credit score eligibility requirements, debt-to-income ratio (DTI) requirements, and income requirements.
While VA loan limits no longer exist, you may be limited to a certain home price if you're looking for a zero-down loan. You will need to meet the lender's down payment requirement. You'll also want to look at the interest rates being offered by a lender in order to choose the best one.
How long does it take to get a VA loan?
With the right lender, processing a VA loan won't take much longer than a non-VA home mortgage loan. Assuming that nothing unexpected occurs with the property or your loan application, you can expect it to take between 40 and 50 days from the time of application to disbursement.
What does a lender need for pre-approval?
In order to pre-approve a borrower for the VA home loan program, a lender will require certain documentation and information. The necessary documents include a certificate of eligibility (COE) that shows that the borrower has a remaining VA loan entitlement, the borrower's most recent pay stubs, bank statements, and tax documents. Lenders will also conduct a hard credit inquiry to check the borrower's credit history prior to issuing a pre-approval.
Who is eligible to get a VA Loan?
VA loans are available to eligible active-duty service members, veterans, reservists, and select surviving spouses. The VA loan entitlement is a lifelong benefit and can be used more than once, as long as the borrower meets certain loan requirements. To see if you are able to take out a VA loan, you can request a certificate of eligibility (COE) online, through your lender, or by mail.
Summary of our guide explaining how to find the right VA lender
Taking out a VA loan is a bit more complicated than getting other types of mortgages, but it’s not impossible – especially with the right lender in your corner. Finding the best VA loan lenders often means shopping around, comparing rates and fees, considering your repayment term options, and asking for referrals from people you trust. The right lender can not only make the loan process go smoother and faster but might be able to save you some headaches (and money) along the way.
Stephanie Colestock is a DC-based personal finance writer with nearly 11 years of freelance writing experience. She covers a wide range of finance-related topics and is currently working toward her CFP®️ certification. Her work appears on sites such as Business Insider, MSN, Fox Business, CNET, Investopedia, and more.