The Truth About VA Loans

The Truth About VA Loans

VA loans offer great options for veterans to purchase and refinance a home, but many veterans don’t even realize these benefits exist for them. With many misconceptions floating around, it can be tough to decipher what is true and what is false when it comes to VA loans. Here, we’ll clear up many of those misconceptions!

FICTION: Veterans only have one chance to use their VA home loan benefit.

FACT: Veterans can use their benefit multiple times throughout their life. Guidelines may apply; however, there is actually no limit.

FICTION: You can only have one VA loan at a time.

FACT: If you used your VA benefits to purchase a home that is now being rented and you did not use all of your entitlement, you can apply the remainder to a second VA home loan.

FICTION: VA loans can only be used to buy a house.

FACT: VA loans can be used to refinance, too—up to 100% of the home’s value in some cases.

FICTION: VA loans are small and only ideal for starter homes.

FACT: Effective January 1, 2020, the effective 'cap' on VA no-down-payment loans was eliminated. The maximum loan amount may vary by lender, but is no longer tied to "conforming loan limits."

FICTION: VA loans take too long to process and close.

FACT: Most VA loans don’t take any longer to close than a conventional or FHA loan. The key is working with a lender who knows the process.

FICTION: It’s too difficult to qualify for a government program.

FACT: In some ways—it may be easier to qualify for a VA loan. VA guarantees a portion of the loan veterans get from private lenders and lenders follow flexible VA standards to make the VA-backed home loans.

FICTION: VA loans are too expensive with the upfront Funding Fee.

FACT: Actually, when you do the math, a VA loan may be less than other programs. The VA funding fee is a one-time payment that can be financed into the loan or paid by the seller. This fee helps lower the cost since the program doesn't require down payments or monthly mortgage insurance. In addition, funding fees are waived for the following:

  • Veteran who is receiving VA compensation for a service-connected disability, OR
  • Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
  • Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge review of existing medical evidence (including service medical and treatment records) that results in issuance of a memorandum rating, OR
  • Veterans entitled to receive compensation, but who are not presently in receipt because they are on active duty, OR
  • Surviving spouse of a veteran who died in service or from a service-connected disability

FICTION: Vets have to be discharged or retired to use their VA loan benefit.

FACT: Active service members get full access to the VA mortgage benefit, too! (After 181 days continuous active duty during peacetime or 90 days active duty during wartime era, personnel become eligible.)

FICTION: Members of the Reserves or National Guard are not eligible.

FACT: Members of the Reserves or National Guard are eligible after six years of honorable service. If activated under the United States Code (USC), a member of the Reserves or National Guard is eligible after 90 continuous days of active duty.

FICTION: Vets who are serving away from home or overseas can’t get a loan until they can return to occupy the property.

FACT: Military men and women who are away on active duty can obtain a VA loan if they intend to return home within a year or have a spouse who will occupy the property in the interim.

FICTION: Widows or widowers of Vets are not eligible for the VA loan benefit.

FACT: Surviving spouses of fallen veterans who died while on active duty or as a result of a service-connected disability may be eligible for a VA loan.

FICTION: I need my VA Certificate of Eligibility in hand before I can look for a house or apply for a loan.

FACT: Don’t let the lack of your certificate stand in the way of applying for a home loan or looking for a new home. Lenders can request your certificate through an automated system if you do not have your certificate yet.

FICTION: VA home loan appraisals and inspections are tougher than those for conventional or FHA financing.

FACT: VA does not appraise or inspect your home. Your lender contracts with a VA-approved appraiser who will review the property to determine a value for the home. This is not a home inspection. If you would like an inspection of the home, contact a licensed home inspector.

Don’t get overwhelmed by the chatter you may hear about VA loans! With these myths cleared up and a good loan officer by your side, you can be sure that you’re making the most of your VA home loan benefits!

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