How the VA Loan Process Works in California

This guide explains how the VA loan process works in California, including all of the important steps a home buyer needs to know about.

1. Establish a basic home-buying budget with a maximum monthly amount.
2. Obtain your Certificate of Eligibility from the Department of Veterans Affairs.
3. Start rounding up your financial documents, or at least figure out how.
4. Get pre-approved for a specific loan amount to narrow your home search.
5. Find a real estate agent to help with your home search (optional).
6. Present your best offer to the seller.
7. Wait for the mandatory home appraisal to be completed.
8. Complete the underwriting process, providing additional documents if needed.
9. Attend closing, sign all finalized documents, and get the keys to your house!

The California VA Home Loan Process

Many of the steps in the mortgage process are the same, regardless of whether you’re using a VA-guaranteed home loan or a conventional (“regular”) mortgage product.

But there are some important differences when it comes to paperwork, home appraisals, and underwriting.

So let’s take a closer look at how the VA loan process works in California:

1. Establish a budget with a maximum monthly amount.

This step is optional but highly recommended. Prior to applying for a home loan, it’s wise to establish a basic home-buying budget.

Your budget should include the maximum amount you’re comfortable spending each month, based on your current income and your other recurring debts. A little planning can help prevent financial distress down the road.

To get started, subtract your non-housing monthly expenses from your net monthly income, while keeping an emergency fund and residual income. This will help you determine how much you’re comfortable spending on a mortgage payment.

2. Obtain your Certificate of Eligibility (COE) from the VA.

Borrowers who wish to use a VA home loan to buy a house must first obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs.

As its name suggests, this document tells the lender you are eligible for the program.

Generally speaking, the following groups are eligible for the VA loan program in California:

• Active-duty military who have served for at least 90 days
• National Guard and Reserve members who have completed at least six years of regular service or 90 days of active duty
• Surviving spouse of a military person who died in service or due to a service-related disability

When requesting your COE from the VA, you’ll need a copy of your DD-214 (for veterans) or a statement of service signed by your C.O. (for current military).

3. Start rounding up your financial documents.

You’ll need to provide several documents to begin the VA loan process. (This is true for conventional mortgage loans as well.) Lenders use these documents to assess your qualifications and borrowing capacity.

Common documents for VA loan applicants include tax records, pay records, bank statements and the like. Check out our A-to-Z list of mortgage documents for more information.

You could expedite the process and streamline the path to closing by rounding up some of these documents early. At the very least, figure out how and where to obtain these documents, so that you’re ready to go when the time comes.

4. Get pre-approved for a specific loan amount.

Mortgage pre-approval is the next logical step in the VA home loan process, and it goes hand in hand with the documentation mentioned above.

You can think of mortgage pre-approval as a kind of financial pre-screening. The lender will review your current income and debts to determine how much you’re able to borrow, and provide you with a pre-approval letter.

This process helps you narrow your housing search to a specific price range. It could also make sellers more inclined to accept your offer.

Here’s more information about VA loan pre-approval.

5. Find a real estate agent to help with your home search.

In California, you are not required to use a real estate agent when using a VA loan to buy a home. Some home buyers choose to navigate the process on their own.

But you should at least consider getting help from a professional. It’s especially important when buying a first home, or when purchasing in an area you’re not familiar with.

An agent can help you find a property that meets your needs, evaluate the list price, and make a strong offer. They can also help keep the rest of the process on track for a timely closing.

If possible, try to find an agent who understands how the VA loan process works in California, including specific requirements like property appraisals.

6. Present your best offer to the seller.

When you find a home that meets your needs, you can present an offer that includes the purchase price, a proposed closing date, and any contingencies you’re including.

The offer will also state the fact that you’re using a VA loan, and that you’ve been pre-approved by a lender for a specific amount. VA loan home buyers typically include the actual pre-approval letter with their offers.

7. Wait for the home appraisal to be completed.

Now we come to a part of the process that’s unique for VA loans — the home appraisal.

In California, any property being purchased with a VA-guaranteed home loan has to be appraised to determine (A) the current market value and (B) the condition of the property.

The Department of Veterans Affairs has specific property requirements for homes purchased with a VA loan. Above all, the property must be safe, habitable, and free of any major hazards or defects.

A little wear and tear is acceptable, and minor issues can often be corrected prior to closing. But if the house has serious issues like a crumbling foundation or dilapidated roof, it might not qualify for VA mortgage financing.

You should also know that VA loans have a mandatory “escape clause” in the contract. So if the appraisal process reveals major problems with the house, the buyer can back out while keeping their earnest money.

8. Complete the underwriting process.

Once the appraisal has been completed, you’ll move into the final underwriting and approval stage.

Underwriting is a process mortgage lenders use to decide whether to approve your loan. It’s similar to the initial screening conducted earlier, during the pre-approval stage. But underwriting digs deeper, with a final verification of your financial situation and the property itself.

The underwriter will also make sure the borrower and the property meet the requirements established by the Department of Veterans Affairs.

If you check these boxes, you’ll be “clear to close” and can proceed to the next and final step.

9. Attend closing, sign paperwork, and get the keys!

You’re now ready for the final step in the VA home buying process. You’re ready to close the deal.

Closing is when you (and the co-borrower, if applicable) sign all of the finalized paperwork relating to the sale of the home. This process is usually managed by a closing escrow agent, who will explain all of the documents you are signing.

After all parties have signed their respective paperwork, the loan “closes” and you receive the keys to your new home!