Are VA Loans Hard to Close? What You Need to Know

Many people wonder if VA loans are difficult to close. While VA loans have unique characteristics compared to conventional mortgages, they are not necessarily harder to finalize when managed effectively. The process involves specific steps and requirements designed to protect the borrower and ensure the property meets certain standards. This article explores the distinctive aspects of VA loan closings, identifies factors that can influence their speed and ease, and provides actionable advice for a smoother experience.

Distinctive Elements of VA Loan Closings

VA loans feature several unique elements that set them apart from other mortgage types. A primary distinction is the VA appraisal process, which includes an assessment of the property’s market value and a check for Minimum Property Requirements (MPRs). MPRs ensure the home is safe, structurally sound, and sanitary, covering aspects like roof integrity, functional utilities, adequate drainage, and accessibility. This is not a comprehensive home inspection but a confirmation that the property meets basic livability and safety standards.

Another distinguishing feature is the VA funding fee, a one-time government charge that helps offset program costs. This fee typically ranges from 0.5% to 3.3% of the loan amount. It varies based on factors such as loan type, first-time or subsequent use of the benefit, and any down payment. Exemptions are available for veterans receiving compensation for service-connected disabilities, active-duty service members with a Purple Heart, and eligible surviving spouses.

The Certificate of Eligibility (COE) is also a fundamental document required for a VA loan. This official document from the Department of Veterans Affairs confirms an individual meets service requirements for VA home loan benefits and outlines their available loan entitlement. Not all mortgage lenders specialize in VA loans, which can impact the process as those unfamiliar with the specific requirements may introduce inefficiencies.

Factors Affecting Closing Speed and Ease

Several variables can influence the timeline and ease of a VA loan closing. The experience level of the chosen lender plays a role; experienced VA loan lenders can streamline the process. An inexperienced lender may cause delays by requesting incorrect documentation or misinterpreting VA requirements.

Issues identified during the VA appraisal can affect closing speed. If a property does not meet the Minimum Property Requirements (MPRs), repairs may be necessary before the loan can close, potentially delaying the process by weeks or months. The appraisal itself can take an estimated 10 to 20 days to complete. If the appraised value comes in below the purchase price, renegotiations or additional funds from the buyer may be required.

Borrower preparedness also influences the closing timeline. Inaccurate information or a lack of readily available documentation, such as pay stubs, W-2s, bank statements, or tax returns, can lead to delays as underwriters request clarification or additional items. Changes in employment, new debts, or large, unexplained deposits or withdrawals in bank accounts during the loan process can trigger additional scrutiny and slow down underwriting.

Market conditions, such as a high volume of home sales or a shortage of VA-approved appraisers, can also extend appraisal timelines. The complexity of a borrower’s financial situation might necessitate manual underwriting, a more in-depth review by a human underwriter. This can occur with lower credit scores, higher debt-to-income ratios, or non-traditional income sources. The underwriting process alone can take an estimated three to six weeks.

Preparing for a Smooth VA Loan Closing

Preparing adequately can contribute to a smooth VA loan closing. Obtaining your Certificate of Eligibility (COE) early in the process is an important first step. You can acquire your COE online through the VA eBenefits portal, by mail using VA Form 26-1880, or your chosen lender can help pull it for you.

Selecting a lender with expertise in VA loans can prove beneficial. Their experience navigating the unique aspects of these loans can prevent common pitfalls and delays. Getting pre-approved for a VA loan early in your home search offers a clear understanding of your purchasing power and demonstrates to sellers that you are a serious and qualified buyer. Pre-approval involves a detailed assessment of your financial situation, including credit, income, and debt, and provides an estimate of how much you are qualified to borrow.

Organizing all necessary documentation ahead of time can expedite the process. Lenders typically require documents such as your DD-214 or Statement of Service, recent pay stubs, W-2s from the past two years, bank statements for at least two months, and a valid photo ID. If applicable, prepare any VA disability award letters or other income verification documents. Understanding the VA’s Minimum Property Requirements (MPRs) when viewing properties can help you identify potential issues early on, allowing you to focus on homes more likely to meet VA standards. Maintaining open and consistent communication with your lender and real estate agent throughout the process ensures that any requests for information are addressed promptly, helping to keep the loan on track.