VA Loan Processing Procedures, Deciphering the VA Lender’s Handbook Chapter 5 Part 1

Chapter 5 of the VA Lender’s Handbook is primarily dedicated to explaining to lenders how to process and submit VA loans. While much of this chapter in the Handbook is only relevant to lenders, there is good information here for potential borrowers to be aware of. Previous chapters have already covered a great deal of information regarding the VA loan process, with Chapter 4 being the most in-depth. If you’re looking for information regarding VA loans that you do not find in the articles about Chapter 5, take a look at the previous articles in the series and you may find what you’re looking for. This article will be discussing the seven basic procedures that a lender needs to go through to process a VA loan. As a borrower, you can speed up and greatly simplify the process if you know what the lender is going to expect and have it ready.


The first step is for the lender to acquire the borrower’s Certificate of Eligibility (COE). This is usually very easy for the lender to do online using the VA’s Information portal, and many borrowers obtain their COE with the lender’s assistance. However, you are able to obtain your COE on your own either online or through a mailed-in application. Doing so could save you some time in the application process, and will also provide you some good information. Whether you decide to do it before going to see a lender or have a lender assist you, a COE will need to be obtained before much more loan processing is done.

The second step is for the reasonable value of the property to be established. This involves scheduling a VA appraisal of the home, the appraisal being conducted, waiting for the results of the appraisal, and finally receiving the results. It is highly advised that the appraisal be ordered early on in the process because it can sometimes take weeks to go from ordering the appraisal to receiving the results. The loan application process can continue before the Notice of Value (NOV) comes back, but it cannot be completed without it.

The third step is for the lender to determine whether the borrower meets the occupancy requirement established by the VA. The occupancy requirement essentially states that the borrower must certify they are intending to occupy the property as his or her primary residence. In order for the VA to agree to guarantee the loan, this requirement must be met. Your lender can give you more information for unusual or extenuating circumstances.

The fourth step is for the loan to be underwritten. In order to complete this step, the NOV must have come back and all of the paperwork must be completed up this point. Chapter 4 (discussed in great detail in previous articles) covers the underwriting process from start to finish. Your loan officer will submit the loan application to the underwriter, but should only do so if the loan officer is reasonably confident that the application will be approved. In other words, if your application makes it as far as underwriting, you have a good chance of getting your loan approved.

The next step that is listed is for the lender to complete the Counseling Checklist for Military Homebuyers with the borrower if the borrower is an active duty service member. This step should be administered as soon as possible after the underwriter has approved the loan. This checklist is required to help military members understand clearly the nature of a home loan and let them know their rights and obligations associated with the loan. For borrowers who go off of active duty after the COE is obtained but before the loan is closed, a new COE that establishes the borrower’s current eligibility is required.

Lastly, for prior approval loans (loans that the lender must submit to the VA for approval before they can be processed – this depends primarily on whether the lender has automatic authority, but also on the type of loan), the lender must submit the loan for prior approval and obtain a Certificate of Commitment (COC) from the VA, and make sure that any conditions listed on the COC are met before closing.

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