Introduction

As a valuable financial tool for veterans, VA loans offer numerous benefits for eligible homebuyers in Olympia. However, a plethora of misconceptions cloud the real advantages of VA loans. In this comprehensive guide, we aim to debunk the top 10 VA loan myths and provide you with accurate information to help you make informed decisions when getting your mortgage.

Table of Contents

1. VA Loans are Strictly for Veterans
2. All Veterans are Guaranteed a VA Loan
3. VA Loans Have a High Default Rate
4. VA Loans Require a High Credit Score
5. VA Loans are Costlier Than Conventional Loans
6. You Can Only Use Your VA Loan Once
7. VA Loans Require Private Mortgage Insurance
8. VA Loans Take Longer to Close
9. VA Appraisals are Difficult and Time-consuming
10. VA Loans Limit Your Home Choices

Myth 1: VA Loans are Strictly for Veterans

Contrary to popular belief, VA loans are not exclusively for veterans. Active-duty service members, National Guard and Reserve members, and surviving spouses of deceased veterans who have not remarried can also qualify for VA loans, provided they meet the eligibility criteria. This is especially prominent when we help service members PCS to JBLM; this question tends to pop up. 

We make it easy to check your eligibility. Click here to check your eligibility now.

Myth 2: All Veterans are Guaranteed a VA Loan

Although the VA guarantees a portion of the loan, not every veteran is guaranteed a VA loan. To qualify, veterans must meet the VA’s service requirements, credit, and income guidelines. Lenders may also impose additional requirements or have their own underwriting standards.

Myth 3: VA Loans Have a High Default Rate

The misconception that VA loans have a high default rate is unfounded. In reality, VA loans have one of the lowest default rates in the mortgage industry. This is primarily due to the VA’s residual income requirement, which ensures that borrowers have sufficient income to cover their living expenses and mortgage payments. We help people mortgage foreclosed homes in Tacoma, not set them up to default.

Myth 4: VA Loans Require a High Credit Score

VA loans do not have a minimum credit score requirement. However, individual lenders may impose their own credit score minimums, typically ranging from 580 to 620. With lenient credit score requirements, VA loans are more accessible to borrowers with less-than-perfect credit.

Myth 5: VA Loans are Costlier Than Conventional Loans

VA loans are often more affordable than conventional loans due to their competitive interest rates and the absence of private mortgage insurance (PMI). While VA loans do have a funding fee, it can be financed into the loan or waived altogether for certain eligible borrowers, such as disabled veterans. Moreover, the VA limits the closing costs lenders can charge, making the overall cost of obtaining a VA loan more affordable for many borrowers. If you’ve seen current BAH rates compared to home prices, it’s a no brainer for many to get a va loan to save money.

Myth 6: You Can Only Use Your VA Loan Once

It’s a common misconception that VA loan benefits can be used only once. In reality, eligible borrowers can use their VA loan benefits multiple times, provided they meet the requirements for VA loan entitlement. Borrowers can even have more than one VA loan at a time, known as “second-tier entitlement,” subject to the remaining entitlement and loan limits.

Myth 7: VA Loans Require Private Mortgage Insurance

Unlike conventional loans, VA loans do not require private mortgage insurance (PMI), even with a down payment of less than 20%. The VA guarantee replaces the need for PMI, reducing the borrower’s monthly mortgage payment and making homeownership more affordable for eligible borrowers.

Myth 8: VA Loans Take Longer to Close

While it’s true that VA loans may have additional paperwork and requirements compared to conventional loans, the average closing time for VA loans is similar to that of other loan types. With an experienced lender and a proactive approach to gathering the required documentation, VA loans can close within 30 to 45 days, comparable to conventional loans. We have over 20 years experience closing these loans for veterans and service members. 

Myth 9: VA Appraisals are Difficult and Time-consuming

Some people believe that VA appraisals are more difficult and time-consuming than conventional appraisals. While VA appraisals do have specific requirements, such as the VA’s Minimum Property Requirements (MPRs), they are not inherently more challenging or lengthy. By working with an experienced VA appraiser and addressing any potential issues early, VA appraisals can be completed in a timely manner.

Myth 10: VA Loans Limit Your Home Choices

VA loans can be used for a wide range of property types, including single-family homes, townhomes, condominiums, and even new construction. While it’s true that the property must meet the VA’s MPRs, these requirements are in place to ensure that the home is safe, structurally sound, and sanitary. Borrowers who prioritize finding a well-maintained property should have no problem using a VA loan to finance their dream home.

Conclusion

Now that we’ve debunked the top 10 VA loan myths, you can make more informed decisions when it comes to your home financing options. VA loans offer numerous benefits for eligible borrowers, such as competitive interest rates, no PMI, and more lenient credit score requirements. By understanding the facts about VA loans, you can take advantage of this valuable financial tool to achieve your homeownership goal