Choosing a VA Lender in Kansas City

If you want the full picture of the benefit before you start comparing companies, start at the veterans hub and come back here when you are ready to talk to lenders.

What is the difference between a VA lender and a VA approved lender?

Every VA loan is made by a private lender rather than by the government, so “VA lender” is a marketing phrase while “VA approved” describes an actual status a company holds with the Department of Veterans Affairs. The VA explains its own role plainly: with a VA backed home loan, the agency guarantees a portion of the loan you get from a private bank, mortgage company or credit union. It determines your eligibility and issues the Certificate of Eligibility, but it does not pick your lender, rank lenders or endorse one over another. Federal regulation then splits approved lenders into two groups, with supervised lenders such as banks, insurance companies, credit unions and mortgage companies subject to federal or state examination authorized by statute to process VA guaranteed loans, while lenders outside that supervision have to apply to the VA for the same authority.

How do I know a lender can close my VA loan without waiting on the VA?

Ask whether the company closes on the automatic basis or on prior approval, because the answer changes your timeline. Under 38 CFR 36.4352, a lender without a supervising banking regulator has to apply to the Secretary for automatic authority, and it must have originated VA loans for at least two years with a VA Lender ID and closed at least ten of them in that period, or closed at least 25 if it has been active for less than two years. It also has to nominate a full time underwriter with at least three years of mortgage experience including a recent year making VA underwriting decisions, and show either $50,000 in working capital or $250,000 in adjusted net worth.

A lender without that authority sends your file to the VA for prior approval before closing, which is not a disqualifier but is a fact you want on the table in week one rather than week five, especially when a seller is weighing your offer against others.

What is a VA lender actually allowed to charge me?

Federal regulation caps the lender’s own origination charge on a VA loan at 1 percent of the loan amount, and that flat charge stands in place of every other origination cost the lender might otherwise itemize. The rule is 38 CFR 36.4313(d)(2), and subsection (d)(1) lists the separate items you may pay in reasonable and customary amounts: the VA appraiser and compliance inspector fees, recording fees and taxes, the credit report, your share of current year taxes and assessments plus the initial escrow deposit, hazard insurance, a survey if one is required, title work and a flood zone determination made by an outside party. The VA buyer guide states it the same way from your side, as itemized fees and charges designated by VA, plus a one percent flat charge by the lender, plus reasonable discount points.

That guide also confirms the seller, the lender or any other party may pay loan fees and charges on your behalf so long as concessions do not exceed 4 percent of the sale. On a purchase loan the funding fee is the only cost you may roll into the loan amount, and the rates effective April 7, 2023 are 2.15 percent for a first use purchase under 5 percent down, 3.3 percent for a subsequent use purchase under 5 percent down, 1.5 percent with 5 percent or more down, 1.25 percent with 10 percent or more down and 0.5 percent on an interest rate reduction refinance or an assumption. A lender who quotes a funding fee without first asking whether you receive VA compensation for a service connected disability is telling you something about how often it does this work. For how it lands in a real file, see how veterans actually pay VA closing costs and the full breakdown of VA loan costs and the funding fee.

How many Loan Estimates should I collect, and what do I compare?

The Consumer Financial Protection Bureau’s answer is contact at least three lenders, because borrowers who shop around save real money. Each lender is required to send you a Loan Estimate within three business days of your application, and the form is standardized on purpose so the comparison is apples to apples. Request the same kind of loan with the same features from every lender, ask each one whether the rate is locked, and then read page two, where origination charges sit in section A, services you cannot shop for sit in section B and services you can shop for sit in section C. Page three carries the annual percentage rate and the total interest percentage, the two figures that expose a low rate propped up by heavy points. A lender who will not produce a Loan Estimate, or who hands you a branded worksheet instead, has answered your question.

Will shopping around for a VA lender hurt my credit score?

Not in any way that should stop you. The CFPB states that within a window of 45 days, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry, and that the impact is the same no matter how many lenders you consult as long as the last credit check falls within 45 days of the first. Shopping matters more on a VA loan than most veterans assume, because the VA does not require a minimum credit score and every lender sets its own. Three offices can look at the same federal program and land on three different score floors, so if your credit file is thin or recently bruised, the spread between lenders is where your approval lives. The same holds for debt to income and residual income, which are federal standards applied through each lender’s own underwriting judgment.

Will the company I choose be the company I pay every month?

Often not, and you should price that into how much weight you give a service promise. The CFPB is direct about it: your mortgage servicer may transfer the servicing rights for your loan to another company, and you have to be notified at least 15 days before the transfer takes effect. The VA says the same in its buyer guide, noting that a servicer may or may not be the same company that originated your loan. Choose an originator on the quality and cost of the origination, which is the part they control, rather than on a promise about who answers the phone in year seven. If servicing does transfer, your loan terms do not change, only the payment address does.

What should I ask a Kansas City VA lender before I apply?

Ask the questions with checkable answers rather than the ones that invite a pitch:

• Do you close VA loans on the automatic basis, or does my file go to the VA for prior approval?
• What is your VA Lender ID, and how many VA purchase loans did this office close in the last twelve months?
• What is your credit score overlay, and what is the highest debt to income ratio you will approve?
• Are you charging the 1 percent flat charge, and what else appears in section A of my Loan Estimate?
• Is the file underwritten here by a VA approved underwriter, or brokered out to an investor?
• What is your process when the Notice of Value comes in below the contract price?

Then look the company and the individual up on NMLS Consumer Access, the public site state regulators maintain so a buyer can verify license status, employment history and whether an originator is authorized in their state. Every licensed originator carries a unique NMLS ID that must appear on your loan documents, and checking it takes about ninety seconds.

What does it mean that Joe is licensed as both a Realtor and a loan originator?

It means two separate licenses and one hard limit, and you should hear the limit first. I am a licensed Realtor in Missouri and Kansas and a licensed mortgage loan originator in both states under NMLS #2547018, and I cannot serve as both the Realtor and the loan officer on the same transaction. If Nelson Home Group represents you on the purchase, your financing goes to a different originator, and if I originate your loan, the real estate side goes to another agent. What the dual license is good for is translation: when a Loan Estimate lands in your inbox at nine at night and something in section A looks wrong, you have somebody to call who reads that document for a living and who did not produce it. To start the lending conversation, the loan application page is the front door, and if you are earlier than that, the Kansas City VA home buying guide and the page on VA loan eligibility and the Certificate of Eligibility cover what has to be in place first.

Who this applies to and who it does not

This page is for veterans who already know they are eligible and are buying in the Kansas City metro. If you do not yet have a Certificate of Eligibility, lender selection is premature, since the COE is the first step and any lender can pull it through the VA’s system. If you are pursuing a Native American Direct Loan, none of this applies the same way, because on that program the VA is the lender rather than the guarantor.

It also will not help in three situations. If the property will not meet the VA minimum property requirements, no lender can approve it as written, and the fix is the property or the loan product rather than the company. If the condominium project is not on the VA approved list, it has to be approved before any VA lender can close. And if your debt to income sits far above the 41 percent standard with no compensating strengths, more Loan Estimates will not solve an underwriting problem. When you are narrowing down where in the metro to buy, the featured communities pages cover both sides of the state line town by town.

Frequently asked questions about choosing a VA lender in Kansas City

Equal Housing Opportunity

Nelson Home Group is committed to the Fair Housing Act. We do not discriminate on the basis of race, color, national origin, religion, sex, familial status, or disability. School district and neighborhood information on this page is provided for factual informational purposes only and does not constitute a recommendation to purchase in any particular area. All buyers are encouraged to independently research neighborhoods, schools, and communities to determine the best fit for their individual needs.

Joe Nelson is a licensed Realtor in Missouri and Kansas, and a licensed mortgage originator in Missouri and Kansas (NMLS #2547018). Joe cannot serve as both Realtor and loan officer on the same transaction. This page is educational and is not an offer of credit or a commitment to lend. Loan products, rates and qualification are subject to underwriting and may change. Eligibility determinations are made by the U.S. Department of Veterans Affairs.