Top VA Home Loan Myths Busted

VA home loans are a fantastic benefit for veterans, active-duty service members, and their families. However, many myths and misconceptions surround these loans, which can deter eligible borrowers from taking advantage of them. Let’s bust some of the top VA home loan myths and set the record straight.

"The willingness of America's veterans to sacrifice for our country has earned them our lasting gratitude."- Jeff Miller, former U.S. Representative

Myth 1: VA Loans Are Only for First-Time Homebuyers

Busted: This is one of the most common myths about VA loans. The truth is, VA loans are not limited to first-time homebuyers. Eligible veterans and active-duty service members can use a VA loan multiple times throughout their lives. As long as you meet the eligibility requirements and have sufficient entitlement, you can use your VA loan benefits to purchase a new home, refinance an existing VA loan, or even buy another home selling your first one or keeping it as a rental.

Myth 2: VA Loans Take Longer to Process

Busted: Many people believe that VA loans take significantly longer to process compared to conventional loans. While the VA loan process includes steps like obtaining a Certificate of Eligibility (COE) and a VA appraisal, these do not necessarily delay the process. In fact, with the right lender, the VA loan process can be just as fast as, if not faster than, conventional loan processes. Experienced Veteran Mortgage Advisors know how to navigate the system efficiently, ensuring a smooth and timely process.

Myth 3: VA Loans Are Harder to Qualify For

Busted: VA loans are actually designed to make homeownership more accessible for veterans and active-duty service members. They often have more lenient qualification standards compared to conventional loans. For example, VA loans typically have lower minimum credit score requirements and allow for higher debt-to-income ratios. Additionally, the VA's guarantee to lenders reduces their risk, making it easier for veterans to qualify for these loans.

Myth 4: You Can Only Use a VA Loan Once

Busted: This myth is far from the truth. You can use your VA loan benefits multiple times, provided you have remaining entitlement. Even if you have used your full entitlement before, you may still qualify for a second-tier entitlement, allowing you to obtain another VA loan. Furthermore, if you sell your home and pay off the VA loan in full, you can restore your entitlement and use it again.

Myth 5: VA Loans Have High Interest Rates

Busted: VA loans often come with lower interest rates compared to conventional loans. Because the VA guarantees a portion of the loan, lenders can offer lower rates to VA borrowers. This can result in significant savings over the life of the loan. Additionally, VA loans do not require private mortgage insurance (PMI), further reducing the overall cost of the loan.

Myth 6: VA Loans Are Only for Single-Family Homes

Busted: While single-family homes are a common use for VA loans, they are not the only option. VA loans can be used to purchase various types of properties, including multi-unit properties (up to four units), condominiums, and even certain manufactured and modular homes. The key requirement is that the borrower must occupy the home as their primary residence.

Myth 7: Surviving Spouses Cannot Qualify for VA Loans

Busted: In certain circumstances, surviving spouses of veterans may qualify for VA loans. The VA extends loan benefits to the surviving spouses of veterans who died in service or as a result of a service-connected disability. Additionally, surviving spouses who receive Dependency and Indemnity Compensation (DIC) may also be eligible for a VA loan.

Myth 8: VA Appraisals Are Too Stringent

Busted: VA appraisals are often thought to be overly strict, but they are in place to protect both the borrower and the lender. VA appraisals ensure that the property meets minimum property requirements (MPRs) for safety, soundness, and sanitation. These standards are not much different from those required for other types of loans. If issues are found, they can often be resolved through negotiations with the seller or by making necessary repairs.

Myth 9: VA Loans Are More Expensive Due to Funding Fees

Busted: While it is true that VA loans come with a funding fee, this fee can often be financed into the loan amount, meaning it doesn't require out-of-pocket payment at closing. Additionally, many veterans are exempt from the funding fee, including those receiving VA disability compensation. Even with the funding fee, VA loans can be more cost-effective due to the lack of a down payment requirement and no PMI. Veterans with a service connected disability or a recipient of a Purple Heart Medal are exempt from the funding fee.

Myth 10: You Need Perfect Credit to Get a VA Loan

Busted: VA loans are designed to help veterans and active-duty service members achieve homeownership, even if they have less-than-perfect credit. Most lenders look for a minimum credit score of around 620, but some lenders may approve loans for borrowers with lower scores. The VA’s backing provides lenders with added security, allowing them to offer loans to a broader range of borrowers.

Conclusion

VA home loans offer numerous benefits and are designed to help veterans and active-duty service members achieve the dream of homeownership. By debunking these common myths, we hope to provide a clearer understanding of VA loans and encourage eligible individuals to take advantage of this valuable benefit. If you’re considering a VA loan, don’t let these misconceptions hold you back. Speak with a knowledgeable VA lender to explore your options and start your journey to homeownership today.

FAQs

Can I use a VA loan to buy a vacation home?

No, VA loans are intended for primary residences only. You must live in the home as your main place of residence.

Do VA loans require a down payment?

VA loans typically do not require a down payment, making them an attractive option for eligible borrowers. Many active-duty service members and veterans choose to put money down as it will reduce their monthly mortgage payments.

Can I refinance my current VA loan?

Yes, the VA offers refinancing options, including the Interest Rate Reduction Refinance Loan (IRRRL) and the Cash-Out Refinance Loan.

Are VA loans available for manufactured homes?

Yes, VA loans can be used for manufactured homes, provided they are on a permanent foundation and meet other VA requirements.

How do I get a Certificate of Eligibility (COE)?

You can obtain a COE through the VA’s website, by mail, or with the help of your lender. This document verifies your eligibility for a VA loan.

For further advice on how to make sure your VA home loan process goes as fast and smoothly as possible, please read our article titled: What Credit Score Do I Need for a VA Loan?