8 Myths About Using a VA Loan to Buy Your Next Home
If you are a veteran or active service member, you may have heard about VA Home Loans. There are many myths swirling about this government benefit for many veterans and service members that may cause people to shy away from these loans. Maybe you have heard that it's difficult to qualify, or that the appraisal process makes things harder. Fortunately, most of these myths and misconceptions are either exaggerations or simply aren’t true.
This benefit originally began with what many know as the G.I. Bill in 1944 and has changed over time, becoming more and more beneficial to those who qualify. The VA Home Loan program remains one of the most tangible and recognizable benefits that veterans, service members, and their families receive for their service, and remains a great way to save a ton of money on your home purchase if you qualify.
Let’s take a deeper dive to help you understand the myths surrounding these benefits, and what the truths about the VA Home Loan really are.
MYTH #1 - You Can Only Use Your Benefits One Time
This is not true. If you have earned the VA home loan benefit, you have earned it for life, and it is not a one-and-done entitlement. You can use this benefit as many times as you want under the right circumstances. While there is an entitlement limit for each individual, it is entirely possible to purchase a home multiple times using your VA Home Loan benefits.
MYTH #2 - Your Benefit Expires
Also not true. Once you become eligible for a VA Home Loan, your benefit does not expire, whether you use it or not. Often people who served a long time ago (20, 30+ years, etc) wonder if they can still obtain a VA Home Loan. The answer is, absolutely yes! Your eligibility is based on how long you served, and the period you served. To confirm your eligibility, a member of our team can get you connected with one of our trusted lenders, who can help you obtain your Certificate of Eligibility.
MYTH #3 - You Can’t Have More Than One Active VA Home Loan at a Time
This is false. While there are some stipulations to this and things that must be taken into consideration, you CAN hold multiple active VA Home Loans at one time, given that you have not exceeded your personal entitlement amount.
What you must keep in mind is that VA Home Loans must be used to purchase your primary residence, and do come with certain occupancy requirements. In many cases, if you used a VA Home Loan to purchase a home in which you have met occupancy requirements, you can choose to rent that home out and use your remaining entitlement to purchase a new primary residence using a VA Home Loan.
MYTH #4 - There is a Limit to How Much Can be Financed
While there used to be a limit on the amount of money that can be financed under a VA Home Loan, this is no longer the case. In 2020, loan limits were removed, and eligible veterans and service members are not restricted to a cap when it comes to financing from the VA. What you need to keep in mind is your entitlement amount and the amount you can actually qualify for from the lender based on your income. These factors can affect the amount you can borrow. A trusted lender who is experienced with VA Home Loans can help you determine how much you can borrow based on your individual situation.
MYTH #5 - Combat Veterans are the Only Ones Eligible
While this misconception is floating around out there, it is not true. Active service members, members of the Reserves or National Guard, and surviving spouses of veterans who died on active duty or from a service-connected disability and are not remarried all may qualify for VA Home Loan benefits provided they have met the service requirements.
MYTH #6 - You Need Perfect Credit to be Approved
This is luckily not the case. The VA Home Loan has some of the most flexible credit and income guidelines of any loan out there, which means it can be even easier to qualify. Many lenders can get you approved (if you meet eligibility criteria for obtaining a VA Home Loan) with a credit score of 580+. VA Home Loans also have the flexibility to allow some of the highest debt-to-income ratios of any loan. This means veterans or service members who do not qualify for a conventional mortgage may still be able to qualify for a VA Home Loan.
MYTH #7 - There are unexpected out-of-pocket costs
The beauty of the VA Home Loan is that in almost all cases, there are very few out-of-pocket costs. While there may still be some small costs associated with obtaining the loan, they are often minimal and should be communicated clearly by your lender ahead of time so there are no surprises on closing day.
Additionally, as a Veteran-owned business with a soft spot for America’s service members, The Chad Wilson Group will waive our processing fee and cover termite inspection fees (often paid for by the seller) for those working with us who are financing their purchase using a VA Home Loan, saving clients even more money. We can also recommend local, trusted lenders who work with VA Home Loans regularly who offer their own discounts, and will communicate clearly with you on exactly what to expect when it comes to out-of-pocket costs.
MYTH #8 - Inspections and Appraisals are Tougher Than With Conventional or FHA Loans
The VA wants to ensure a property financed with a VA Home Loan is safe for veterans, service members, and their families to live, they do have certain property requirements. However, these items are things that a typical buyer would look for anyways. They include:
- Access to a continuous water supply, sanitation, and sewage disposal
- Adequate roofing
- Absence of lead-based paint, dry rotting wood, fungus, and wood-destroying insects such as termites
- Functioning electric and HVAC systems
- Accessibility by street (can be public or private)
There are other requirements, but the basic idea is that the home must be hazard-free and generally safe to live in.
Once you have found a home, put in your offer, and filled out a full application for your VA Home Loan, the VA requires your lender to order an appraisal. This is where a third party will evaluate the home. This is very typical for the home-buying process regardless of how it is being purchased. The inspectors in these situations are typically the same inspectors who would perform the evaluation on any other home, but are required to be approved by the VA. These appraisers do evaluate homes based on a particular set of standards put out by the VA, but this does not necessarily mean they are harder on the appraisal. It is great protection for buyers!
While buyers using a VA Home Loan are not required to order a home inspection, it is very typical for all buyers to do so. The inspection looks at all aspects of the home and identifies any potential problems. This allows buyers to make a more informed decision on their purchase, and often, allows them to identify repairs that they wish to negotiate with the seller before officially making the purchase. Basically, an inspection lets you know exactly what you are getting into with a home, and is highly recommended for all home buyers, not just those using a VA Home Loan.
The fact is VA Home Loans provide eligible veterans and service members with the opportunity to save thousands of dollars or more on their next home purchase. In order to maximize the benefits of a VA Home Loan, it is best to work with a trusted lender who has experience originating, processing, and closing VA Home Loans and a real estate agent who knows how to navigate the market for those using VA funding.
The Chad Wilson Group is not only veteran-owned, we work with buyers using these amazing benefits often. In fact, our team includes real estate agents who are designated Military Relocation Professionals (MRP). We understand VA financing, military benefits, BAH rates, VA loan limits, relocation requirements, and more!
Not only can we help you find the perfect home for you, but we can also recommend local, trusted lenders for your VA Home Loan, who will ensure you are getting the most from your hard-earned benefits. We will work closely with them to make the home buying process as easy and seamless as possible.
Interested in finding out more about your benefits? Contact us today or fill out the form below and we will reach out to find out how we can help you save money and get into your next home.