Top VA Loan Lenders: 2024 Reviews & Comparisons

The Department of Veterans Affairs has been helping veterans, and their families qualify for home loans since 1944. VA loans are not issued by the VA but rather through banks and lenders. However, the VA does guarantee each qualified VA loan.

There are many benefits of VA loans compared to conventional mortgages. For example, applicants can apply for a VA mortgage with no down payment, and you don’t have to purchase private mortgage insurance (PMI).

You’ll likely get a lower interest rate than you would with a conventional mortgage. And you can qualify for a VA mortgage even if you only have fair credit.

Best VA Mortgage Lenders of September 2022

Even though you’ll get a discount with the VA loan program, it’s still important to shop around to find the best VA mortgage lender. In theory, you could apply for a VA loan with any mortgage lender, but some are better than others.

You should choose the lender that will give you the lowest VA loan rates and the most flexible repayment terms. Here are the eleven best VA mortgage lenders:

What are VA loans?

VA loans are mortgage products backed by the Department of Veterans Affairs. These loans allow service members, veterans, and their surviving spouses to buy homes with little or no money down and avoid private mortgage insurance. In addition, VA loans feature some of the most competitive interest rates on the market.

Although conventional mortgage lenders issue VA loans, they’re guaranteed by the federal government. Unlike standard loans, VA loans provide 100% financing when buying a home. Eligible borrowers can use the VA loan to purchase or build a house, renovate a house, or refinance their mortgage.

The VA doesn’t offer mortgage financing directly, but it sets the qualifying standards and dictates mortgage terms. Qualified borrowers can then secure a mortgage from private lenders such as mortgage companies, credit unions, and banks.

There are several types of VA loans, and they’re all classified as non-conforming loans due to their flexible credit requirements, lower interest rates, and down payment waivers. However, VA loans carry no prepayment penalties, and the VA may provide some assistance if you’re unable to keep up with your monthly payments in certain situations.

Who qualifies for a VA loan?

Veterans with an honorable discharge and service members on active duty who meet the minimum requirements can qualify for a VA loan. Surviving spouses of veterans who died in active service are also eligible for VA loans.

To be eligible for a VA loan, you must meet three criteria:

• Meet the VA’s basic service requirements
• Obtain a valid Certificate of Eligibility
• Meet a lender’s underwriting requirements

Department of Affairs’ Basic Service Requirements

You’re eligible for a VA loan if you meet one or more of these requirements:

• More than 90 days of continuous active duty during wartime
• More than six months of active service during peacetime
• Six years of service in the National Guard or Reserves
• You’re a surviving spouse of a veteran who died in the line of duty or from a service-related disability

Have a Valid Certificate of Eligibility

You need the above qualifications to secure a Certificate of Eligibility (COE). The certificate proves that you’re eligible for VA financing and provides details about your VA entitlement.

First-time borrowers have full entitlement, allowing them to take out a VA loan without a down payment. It also guarantees the lender that the VA will pay 25% of any loan amount over $144,000 if you default.

Meet a Lender’s Credit Score and Income Requirements

When issuing VA loans, most VA lenders set a minimum credit score requirement of 620 to 640. They will also look at your income level and debt-to-income ratio to gauge your ability to repay the loan. Your income level primarily determines the amount of money you can borrow.

What credit score do you need to qualify for a VA loan?

Most VA loan lenders require a minimum credit score of at least 620 to qualify for a VA loan, while others prefer to see it closer to 640.

Each of the three leading credit agencies, Equifax, Experian, and TransUnion, use the FICO index to calculate your credit score. However, subtle differences between the credit bureaus may lead to variations in the final credit score. For example, if your credit scores from the three bureaus are 653, 640, and 633, the VA lender will discard the highest and the lowest and use the middle credit score.

For this reason, you should get a credit report from each of the three agencies when applying for a VA loan. Sometimes credit reports contain errors that lower your credit score. Rectifying these errors can lead to a significant boost that could push you over the cut-off point or help you secure a better interest rate.

How to Apply for a VA Loan

Although applying for a VA loan may seem daunting at first, it becomes relatively straightforward once you understand the process. Here’s a simple six-step guide to the VA application process.

1. Determine Eligibility

National Guard and Reserves, current Active Duty, and veterans are eligible for a VA loan if they meet the required active duty dates, minimum active duty service, and wartime periods, as well as obtain a Certificate of Eligibility.

You can apply directly through eBenefits at VA or request it through the mail by filling out form 26-18880 and attaching the supporting service documents. Your lender may also be able to apply on your behalf.

2. Choose a VA-Approved Lender

Not all lenders make a great fit when looking for a VA mortgage. VA loans can only be originated by lenders on the Department of Veterans Affairs’ shortlist.

Secondly, some lenders specialize in conventional loans, while others are dedicated almost exclusively to the VA mortgage program. A VA specialty lender is more knowledgeable about the loan process, delivering a better experience most likely.

3. Get a Mortgage Pre-approval

Mortgage pre-qualification is necessary when buying a home with a VA loan. It lays the groundwork for a smooth application process while eliminating potential surprises down the road. During pre-qualification, you’ll speak with your potential lender about your credit history, income, marital status, employment, and other crucial factors.

The pre-qualification process may offer insights into what you can do to increase your chances of approval. A pre-qualification letter gives you a ballpark loan figure that you may be approved for later, helping to shape your house-hunting efforts.

Even though the letter doesn’t guarantee loan approval, it serves as a guideline to let you know where you stand. It also shows that you are serious and have already started the process with a lender when making an offer on a home. Of course, the lender will have to verify all the information you provided before processing the loan.

4. Find Your Ideal House

House hunting is the most exciting step of your VA loan application since it allows you to find your dream home. A pre-qualification letter lets you shop strictly within your price range to save time and avoid disappointment later. While any real estate professional can help you with this step, it’s best to work with someone familiar with the VA mortgage loan process.

Since the VA allows the seller to absorb specific fees and costs, a seasoned VA loan agent will help you negotiate these fees and potentially save some money. Once you agree, you can sign a purchase agreement and proceed with the VA loan application.

5. VA Appraisal

After submitting your signed purchase contract to your lender, they’ll request the VA to appraise the home. Again, you need a VA-certified appraiser since they’re familiar with the standards required for VA financing. A VA appraiser will ensure the house is valued correctly and corresponds to its current market value.

The appraiser will inspect the home to ensure it passes the VA minimum property requirements (VA MPR). However, a VA appraisal doesn’t negate a proper home inspection. Unlike an appraisal, a home inspection checks for defects, code violations, and property conditions.

The VA grants its appraisers ten days to complete the appraisal process barring any extenuating circumstances. Then, if the property is up to par, and you meet all the loan requirements, you can proceed with the loan approval process.

6. Close the Sale

After the underwriter approves your loan, you can close the loan and move into your new home. The seller legally transfers the property over to you during the closing process. You’ll need to sign documents confirming that you understand and agree with the loan’s terms and conditions.

You’ll also need to pay the closing costs, if required, and provide proof of homeowner’s insurance. You can take possession of the house immediately after signing all the closing documents.

How do I get started?

If you’re interested in applying for a VA loan, you’ll need to find a VA mortgage lender and get prequalified first. Once your VA lender has verified your income and financial information, you’ll receive your pre-approval letter.

Now that you know what you can afford, you can begin looking for houses. Once you find the home that’s right for you, you can put in an offer and start the negotiation process. It’s a good idea to partner with a real estate agent who knows the ins and outs of VA loans.

When you’re under contract, the VA will appraise your property. If everything looks good, you are in the clear to close on your new home.