One of the most important steps you can take when buying a home is securing a pre-approval. This is true even if you are eligible for VA financing. A letter stating that you are already approved for a specific loan amount can speak volumes to a seller. It lets them know that not only are you a serious buyer, but that you can have the financing necessary to buy the home.
So how do you secure that pre-approval? First, you’ll complete a loan application. However, in order to back up the information you provided on there, you’ll need the following documents.
Personal Identifying Information
First, you’ll need to prove you are who you say you are. You can do this with your state-issued government ID. However, you’ll have to take this one step further. You must also prove to the lender that you are eligible for VA benefits. You’ll need your VA Certificate of Entitlement in order to prove this.
If you don’t have it, you can obtain it in one of several ways:
- You can request it directly from the VA through their website
- The lender can request it for you, obtaining it in minutes online
The Certificate of Entitlement lets the lender know that you can use the VA program. Without the COE, a lender cannot provide you with a pre-approval for a VA loan.
Proof of Income
Next, you‘ll need to prove the income you stated on your loan application. You do this with your most current paystubs. Generally, you’ll need paystubs covering the last 30 days of employment. If you are paid monthly, you’ll provide one paystub. If you are paid weekly, you’d provide 4 paystubs.
You can also provide the lender with your last two years’ of W-2s. These documents show the lender your income over the last couple of years. This allows the lender to determine your pattern of earning income. For example, if you made less in 2017 than you did in 2016, the lender may be leery of your earnings potential. Generally, they want to see an increasing pattern in order to ensure that you will be able to afford the loan.
Proof of Divorce or Child Support
If you pay or receive alimony or child support, you need documentation to prove the amounts. If you receive it, you’ll need the court ordered documents showing the amount you are supposed to receive. You will also need to provide your bank statements showing regular receipt of the income. Many lenders require the last 6 to 12 months’ of bank statements to prove you receive the income regularly.
If you pay alimony or child support, you’ll need to provide the court ordered documents as well. Only this time, the amount counts against you. The lender must include it in your monthly debts and debt-to-income ratio.
In either case, the lender must know how long the alimony or child support is supposed to last. If it’s less than 3 years, you cannot use the income for qualifying purposes. As far as paying the debt, though, most lenders include it no matter how long you have left to pay.
Once you provide your personal identifying information and you sign the application, you give the lender permission to pull your credit score. While the VA doesn’t have a minimum credit score they require, many lenders require at least a 620, with a majority requiring at least a 680.
Lenders will also look at your credit history, not just the score. They want to see your pattern of payments. Do you pay bills late? Have you defaulted on any other mortgages or other loans? These are things they take into consideration when determining if they should pre-approve you for a VA loan or not.
These documents should get you by when you are looking for a VA pre-approval. Once you are approved and you sign a purchase contract, you’ll have to provide a few more documents. A pre-approval is not a guarantee of a loan. It puts your foot in the door at the lender, but your loan is not final until you undergo the full underwriting process.