Whether you’re a young family looking to buy your first house or a couple of retirees hoping to settle down somewhere sunny, finding a place to call home is an exciting time for veterans and active-duty military members.

But it can also be a stressful time. Getting pre-qualified and, more importantly, pre-approved for a home loan can go a long way toward making your home-buying journey a smooth one.

Loan pre-approval gives prospective home buyers a clear sense of their purchasing power. Pre-approval also shows sellers and their real estate agents that you’re a serious and strong buyer.

Finding the home of your dreams only to learn that you can’t afford it can be a crushing experience. In fact, many real estate agents won’t even show homes to buyers who haven’t been vetted by a lender.

Let’s take a closer look at the importance of loan pre-approval.

Pre-qualification vs. pre-approval

Loan pre-qualification and loan pre-approval are two different stages. Pre-qualification typically follows a brief conversation with a lender about your home-buying plans, income, assets, and more. Lenders will ask permission to pull your credit scores, and you’ll need to meet their benchmarks to move on to pre-approval.

Credit score minimums can vary based on the lender, the loan type, and other factors. The good news for military buyers is that VA loans tend to feature lower credit score requirements than conventional loans.

Unlike pre-qualification, which is essentially a conversation, loan pre-approval is a more detailed process that may require you to provide the following documents, among others:

  • A copy of your valid driver’s license or passport
  • Your most recent pay stub or Leave and Earnings Statement
  • Statements from your checking, savings, and retirements accounts
  • A copy of your DD-214 military discharge paperwork or a Statement of Service

Before issuing pre-approval, your loan officer will carefully review your documents. You’ll need to meet requirements for credit score, debt-to-income ratio, and other benchmarks, all of which can vary depending on the lender and the type of home financing. Some loan types have looser requirements than others.

Put your cards on the table

The more documentation you provide upfront, the less work you’ll have to do in the weeks leading up to your loan closing. Failing to address potential problems during the pre-approval process can hurt you down the road.

Face any red flags before you shell out money for a deposit or inspection fees. Talk with your lender if any of these scenarios apply to you:

  • You’re separating from the military within 12 months
  • Your divorce is pending
  • You may have difficulty occupying the new home
  • You’ve recently established new credit accounts
  • You’re self-employed
  • You write off business or real estate losses
  • You have taken out a payday or other private loan
  • You own any real property outright
  • You owe money to the IRS or another government entity

This list isn’t exhaustive. The bottom line is you need to communicate early and often with your lending team about your full financial and home-buying picture.

No guarantees

Once you are pre-approved, the lender will issue you a pre-approval letter. It is your ticket to making a solid offer on a home. The letter tells real estate agents and sellers that you have what it takes to follow through on your offer and seal the deal.

But it’s important to understand that pre-approval is not a guarantee you’ll get that loan. Pre-qualification and pre-approval aren’t binding steps, and they’re also not promises from a lender. Even with a pre-approval letter, there are still more document requests and steps you need to take before you can close on the loan.

But getting pre-approved is a major first step—and it’s one that paves the way for what follows.

Though you may be eager to start looking at homes right away, getting pre-approved first could save you from headaches and heartaches. When you make an offer as a pre-approved buyer, the seller will know it’s worth the paper it’s printed on, giving you a distinct edge in a real estate climate that can be highly competitive.


This article was written by Chris Birk, director of education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”

NMLS 1907 (www.nmlsconsumeraccess.org) Veterans United Home Loans is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency; does not reflect DOD endorsements. Equal Opportunity Lender. 1400 Veterans United Drive Columbia MO, 65203.