Navigating Your Military Relocation to Billings, MT: Part 2 of 3 – The Ins and Outs of Buying a Home With a VA Loan
When you’ve decided that you want to buy instead of rent for your military relocation, now comes understanding the buying process when using a VA loan. Real estate in general often overwhelms people because there’s a lot of moving parts and a bunch of confusing terms… but then when you throw VA things into the mix, it can take on a whole other level of complexity.
The good news, though, is that you don’t have to figure anyyyyy of it out alone!
Hopefully you followed step 1 and have connected with a local real estate agent and VA lender. Those two people are going to be KEY to a smooth move.
(Psst: If you’re relocating to Billings, I’m your girl!)
When you start the buying process, your realtor and lender will walk you through every step of the process, but in this blog post I want to give you a general understanding of buying a home with a VA loan, including the key differences between VA loans and conventional loans, and VA loan eligibility and entitlement.
Let’s dive in.
The Key Differences Between VA Loans and Conventional Loans
If you’ve ever bought a home before, then you probably remember most of the basics. What’s interesting though is a lot of those basics you might be familiar with when buying a home with a conventional loan, aren’t actually a part of the VA loan process at all.
There’s 4 major differences when buying a home with a VA loan, including:
No Down Payment Requirement
Typically when I’m working with buyers, down payment is a big topic of discussion. It’s something we address right from the beginning to ensure they have enough funds to cover the down payment and closing costs.
But when you’re buying a home with a VA loan, one of the biggest benefits is that it allows eligible borrowers to purchase a home without a down payment. While conventional loans often require a down payment ranging from 3% to 20%, VA loans eliminate this upfront cost, making homeownership more accessible.
No Private Mortgage Insurance (PMI)
Conventional loans typically require PMI if the down payment is less than 20% of the home’s purchase price. VA loans, however, do not require PMI at all, resulting in another big savings as the buyer!
Competitive Interest Rates
VA loans often offer lower interest rates than conventional loans and here’s why: since the VA guarantees a portion of the loan, lenders can offer reduced rates, resulting in lower monthly payments and significant long-term savings for borrowers.
The reason interest exists for loans at all is primarily because it compensates the lender for the risk and cost of lending money. With a VA loan, the risk is lessened a bit since they know the VA is backing them.
Flexible Credit Requirements
Another huge thing to consider when buying a home is your credit score. It’s something that so many of my buyers have to stay on top of and be intentional about strengthening.
But when it comes to a VA loan, you have more flexibility here too! Unlike conventional loans, which often have stricter credit score requirements, VA loans are more forgiving when it comes to credit history. While lenders still evaluate creditworthiness, the VA program is designed to accommodate those with less-than-perfect credit.
Overall, VA loans provide military members and their families with powerful benefits that can reduce financial strain and make home ownership much more attainable, even when relocating on a short notice!
So, with these things in mind, it’s time to understand who exactly qualifies for a VA loan and how the process works as a whole.
VA Loan Eligibility and Entitlement
First things first, who exactly qualifies for a VA loan?
The VA breaks down more nitty gritty eligibility details for you, but generally speaking, to be eligible for a VA loan, it varies based on your role in the military:
For service members – if you’ve served for at least 90 continuous days (all at once, without a break in service), you meet the minimum active-duty service requirement.
For Veterans, National Guard members, and Reserve members – the minimum active-duty service requirements depend on when you served. Click here for the full breakdown!
When you work with a lender who is familiar with the VA loan process, they can help you understand your specific eligibility and guide you on how to apply for your Certificate of Eligibility.
Understanding VA Entitlement: What It Is and How It Works
Once you’ve determined your eligibility, another puzzle piece is thrown into the mix is your VA entitlement.
VA entitlement refers to the amount of the loan that the VA guarantees. And remember, this guarantee is what reduces the risk for lenders, allowing them to offer loans with no down payment and favorable terms.
There are two types of entitlement:
Basic Entitlement – this typically covers loans up to $144,000, with the VA guaranteeing up to $36,000 of the loan amount.
Bonus Entitlement – also known as the second-tier entitlement, this applies to loans above $144,000, allowing for higher loan amounts based on local limits.
Understanding your entitlement helps determine how much you can borrow without needing a down payment. It’s especially important when considering multiple property purchases or selling and buying a new home during a military relocation.
Again, working with a lender who specializes in VA loans is going to be your best bet here! They will have the tools, resources, and knowledge to guide you through every single step of the VA loan process so that none of it feels overwhelming for you.
The VA Loan Buying Process
So, now that we’ve covered who qualifies and entitlement, let’s quickly go through the overall process of buying a home with a VA loan.
The good news is that this physical process really doesn't change much from any other home purchase. The major differences that you’re going to experience are in the prep work phase where you’re gathering all of your documents and in the pre-approval phase when you’re working with your lender.
After that, everything is pretty standard!
1️⃣ Pre-approval
As mentioned in Part 1 of this blog series, your very first step of relocating is finding a local realtor who is familiar with the area you’re moving to so they can help you find exactly what you’re looking for AND finding a local, VA lender who is confident with the VA loan process.
When you’ve done both of those things, it’s time to REALLY start the home buying process, starting with your pre-approval. When it comes to home buying of any kind, this is where everyone starts.
Your pre-approval gives you a clear understanding of your budget, shows sellers you’re a serious buyer, and streamlines the loan process once you’ve found a home.
This is the part of the entire process where you’ll be asked for lots of different documents. Here’s a general list of things you’ll likely need as a VA buyer to help get you started on the right foot:
Documents Needed for VA Loan Pre-Approval
Proof of Military Service – this is your Certificate of Eligibility (COE) and your VA lender can help you obtain this document through the VA’s system, or you can apply directly on the VA’s website
Personal Identification – driver’s license or state-issued ID and Social Security number
Proof of Income – recent pay stubs (usually from the last 30 days), W-2 forms from the past two years, and tax returns
Employment Verification – employers may be contacted to confirm your current job status and income stability
Financial Documentation – recent bank statements (usually from the last two months) to show savings and cash reserves and statements from retirement accounts, stocks, or other assets if applicable
Debt Information – documentation for any recurring debts, such as student loans, car loans, or credit card balances and any child support or alimony obligations, if applicable
Additional VA Loan-Specific Documents – DD-214 Form (for veterans) and Statement of Service (for active-duty members)
2️⃣ Finding a home
Once you’ve gotten pre-approved, the real fun can begin – the actual home search. 🔍
This is the part of the buying process where you’ll work hand in hand with your realtor to find the house that you want to call home.
When you find a realtor that you want to work with, you’ll schedule a buyer’s consultation, which is essentially just a meeting (can be virtual or in person) to discuss what the home buying process will look like for you specifically.
In this blog post, I breakdown what to expect on your buyer’s consultation and a list of potential questions to ask your realtor to make sure they’re a good fit!
Once you’ve chosen a realtor to work with, they will take you through their specific process of setting up a home search to ensure that you’re ONLY looking at properties that are a fit for the wants and needs that you discussed in your consultation.
With the Real Estate Collective, the home search process goes like this:
I like to call it a process of elimination rather than trying to find a needle in a haystack because if we get too specific, you could miss out on something that was mismarked or really is a great opportunity!
The factors I specifically like to focus on are location and home type (single family, townhomes etc).
If there are some non-negotiables, such as the number of bedrooms or bathrooms, we can add those in, but I prefer to give the opportunity to make our own decisions rather than have a computer decide for us!
The thing to remember with real estate and the home buying process is that you truly NEVER know what you’re going to find and fall in love with.
I see this happen ALL the time and many of my clients shock themselves when they end up choosing a home that they never expected. This is why I encourage everyone to keep an open mind during the process and go into it with an expectant heart.
What’s meant to be WILL be and I really do believe that!
3️⃣ Making an offer
Once you’ve found the ONE, it’s time to submit an offer that a seller simply can’t say no to… and yes, there’s a strategic way to do this!
First things first, it’s important to conduct market research (which is something your realtor can help you do) to get an idea of what similar properties in the area have recently sold for.
This type of market analysis will typically be referred to as “comps” in the real estate world and takes into consideration the property's location, condition, features, and how it compares to similar homes in the market.
In addition to understanding the comps in the market, you then want to consider the seller’s situation and their motivations.
Are they moving and looking for a quick sale?
Are they more interested in a competitive price?
While a seller may not flat out tell you these things, your realtor can typically help you determine the main motive of the seller and can guide you on your offer based on that.
Finally, based on your market research and the seller’s situation, you can accurately determine an offer price that reflects its value while aligning with your budget.
Depending on the market, you can absolutely offer slightly under the asking price to open up room for negotiation, but it’s important not to lowball significantly.
This is why working with a realtor is so important, so that you can have a set of expert eyes and receive thoughtful guidance on your offer before you submit it for consideration!
When you submit your offer, it’s important to include contingencies, which can protect you in case something unexpected is found during inspections or if certain conditions aren't met. Common contingencies include a home inspection, appraisal, financing, or the sale of your current home.
4️⃣ Inspection and appraisal
Once you’ve made an offer and are considered “under contract” on your home, it’s time for two REALLY important parts of the buying process – inspection and appraisal.
The primary purpose of an inspection is to provide the buyer with an in-depth understanding of the property's overall condition.
During the inspection process, the inspector will work to identify any existing or potential issues that might affect the home's value, safety, or livability. This includes examining the structural components of the house, including the foundation, walls, roof, and other critical systems like electrical, plumbing, HVAC, and more.
After the home that you’re hoping to buy has been inspected and approved for purchase, it’s time for the next piece of the puzzle.
Similar to a home inspection, a home appraisal serves multiple purposes, primarily to determine the fair market value of a property.
It's an important step in the home buying process and is often required by lenders before approving a mortgage. During this step, an appraiser will evaluate the property's characteristics, condition, and comparable sales in the area to determine its current market value.
This value determination helps BOTH, the buyer and the lender, understand what the property is worth. Once the market value is clearly understood, your lender will use the appraisal to ensure that the property's value justifies the loan amount.
This part of the process helps them mitigate the risk of lending more money than the property is worth, which could occur if the borrower defaults on the loan.
5️⃣ Closing
After your appraisal is received, your file goes into “underwriting,” which is where it’s reviewed by the underwriters of the bank that determine if the loan conditions have been met.
During this phase, it’s your lender’s time to shine! Your lender will be in major contact with you prior to closing to ensure they have everything they need to get you to that closing table as fast as possible.
Oftentimes as a military buyer, you’re in a time crunch, so you might be wondering, “how can we speed up the closing process?”
This is where having a trusted agent on your side is going to be a HUGE benefit because they can do everything in their power to get you to the closing table as soon as possible.
While some things are completely outside of your control, there are a few things you can do to ensure that you have the smoothest home buying process possible:
Communicate (and then communicate some more)
Communication is going to be your largest asset in any home buying process. If something is requested of you, just know that it has to go five layers deep before it's actually approved, so time is truly money at this point.
Communicate with your lender, respond to their requests, and when you don’t understand something – ASK. There’s no silly question!
Be prepared
Honestly the whole reason I write these blogs is so that YOU can be prepared as a home buyer! There’s nothing worse than getting into a situation where you don’t know what to expect and you’re completely blindsided.
When you can have a general idea of what you’ll need, you can show up prepared, thus speeding up the process.
Work with trusted professionals
Lastly, one of the best things you can do for yourself during a home buying process is to work with professionals that have been highly recommended and that you trust. There are people out there who unfortunately don’t have your best interest at heart and are simply trying to earn a buck.
But on the flipside, there are also some really amazing people out there who will bust their butts to make sure that you get a fair deal and get into the home of your dreams in a timely manner. It’s all about finding and working with THOSE people!
(And psst: if you’re buying in Billings, lucky for you I’ve got a wholeeee list of trusted professionals that I personally know and call on every single time.)
As far as the actual closing timeline goes, it really depends on two main things:
The extent and complexity of the items requested of you
How long it takes you to obtain those items
So, I say this with all of the realtor love in my heart – at this point in the process, it really is on YOU!
Of course your agent and lender will be there every step of the way to make sure you’re obtaining the right documents and to answer any confusing questions you may have, but ultimately it’s up to you to submit what your lender needs (per the bank's request).
Assuming you submit all of your documents in a timely manner, the closing timeline can be as little as 30 days (this is a home buyer’s dream), but realistically you’re looking at 45-60 generally speaking!
Once the underwriting has all the items they requested and are satisfied with the results, you’ll get to hear those magic words that every real estate agent and home buyer loves to hear: CLEAR. TO. CLOSE. 🥳
For a closer look at what happens on closing day, click here!
Need support with your military relocation to Billings, MT?
Overall, relocating to Billings for a military assignment can be both exciting and challenging, but with the right support, it can also be a smooth and rewarding experience!
That’s why working with a local real estate agent who is established in the area you’re moving to and KNOWS 👏🏼 THEIR 👏🏼 STUFF 👏🏼 is so important.
Although I don’t consider myself a military expert by any means, I DO consider myself to have the relocation process in general on lock and am confident in the resources and connections I have to make your military move as smooth as possible.
SO, if you have a Billings military relocation on your radar and are looking for a local agent to help you navigate the ins and outs of buying, I’d love to help you get the process started!
CLICK HERE to get connected so I can learn more about your specific scenario!