7 VA Loan Myths: Separating Facts From Fallacies To Empower Buyers And Sellers

VA loans are one of those government benefits which either people aren’t completely aware of or do not fully utilize due to associated myths or misconceptions.

VA loans are offered by the U.S. Department of Veterans Affairs to veterans or active military members to help them realize their dream of homeownership; buying a new home or refinancing an existing mortgage. You can get these loans through private lenders, and as these loans are partly guaranteed by the VA, you are likely to get favorable terms from your lender.

These 0% down payment loans are an amazing option but often are not taken advantage of. There are a bunch of myths floating around that might stop you from taking advantage of this opportunity. Let's dispel these misconceptions and set the record straight!

Myth #1: Only Veterans can Apply for VA Loans

You might have heard that VA loans are exclusively available to veterans, however, that's not true! Although, initially the VA loan program was created to assist veterans in obtaining home ownership. But, over time the eligibility criteria for VA loans have been revised. In addition to veterans, other groups that now qualify for benefits include active-duty personnel, members of the National Guard or Reserves, and some surviving spouses.

A great aspect of getting VA loans is that these can help you buy a home without having to make an initial payment. Of course, the specific eligibility requirements do depend on your service history and status.

But let’s make it clear! VA loans are not limited to veterans alone!

Myth #2: VA Loans Lack Vitality

You may have a negative perception of VA loans because of misunderstandings or bad experiences in the past. However, the truth is that VA loans are actually robust mortgage options, especially if you are a veteran/military home buyer.

Unlike other loan types, you don’t need mortgage insurance for VA loans. These have more lenient requirements as well. Plus, you can benefit from little to no down payment as well as competitive interest rates.

If you are an eligible VA loan borrower, you can skip a down payment for a home valued up to $417,000. The closing success rate reportedly has been higher for VA loans as compared to conventional financing. So, it seems like VA loans perform pretty darn well.

Myth #3: VA Loans are Complex

Nowadays, you'll find dedicated VA loan teams, online applications and document submissions, and educational resources to help you understand the process better. All of this has made getting a VA loan a lot easier than it used to be.

Myth #4: VA Loans have Extended Closing Times

To some extent, it was a reality in the older times, but with the advancements in automation and processing, the closing time has decreased to a great extent. Reports claim that the closing time is even lesser than FHA loans.

Myth #5: VA Appraisal Process can be a Hindrance

Due to the specific conditions and requirements, you may believe that the appraisal process makes it difficult to buy a home. However, that is simply not the case. The VA appraisal ensures that your home meets the Minimum Property Requirements (MRPs) so that you receive a home that is ready to move in and meets basic livability requirements, such as having a sturdy build, and proper sanitation features. As a result, you would be assured that you will not have to deal with the financial burdens of making necessary repairs or renovations. If the home is a fixer-upper or a foreclosure, and the home is not in a good condition, you might not be able to finance it through VA.

Myth #6: VA Buyer’s Closing Costs are Paid by Sellers

Some sellers might offer to cover the closing costs to sweeten the deal, but they're not required to do so by law. In fact, the maximum amount of concessions a seller can offer is limited to 4% of the purchase price.

There are also restrictions on the fees that lenders may charge VA buyers, which furthers the confusion. While sellers can't pay for everything, a lender or real estate agent might be able to pick up some of the costs that sellers can't cover, like attorney fees or prepayment fees. In fact, almost everything in a real estate transaction can be negotiated, including the terms for VA buyers. Ultimately, whether or not a seller is willing to cover closing costs for a VA buyer is totally up to them.

Myth #7: VA Loans are more Costly than Conventional Loans

Don't believe the hype that VA loans involve more costs than conventional loans! Sure, they have a funding fee, but that doesn't necessarily make them more expensive. In fact, VA loans have more lenient credit and income requirements, which can actually make them a better deal for certain borrowers.

In addition, VA loans provide benefits, such as no down payment and no private mortgage insurance requirements, which can offset other costs and make them more affordable in the long run.

Remember, the terms and rates of your VA loan will depend on your circumstances. But overall, VA loans are a smart and practical option if you are an eligible borrower. So, don't let this misunderstanding stop you from exploring the benefits of a VA loan.

Bottom Line

To conclude, the myths surrounding VA loans can create confusion and prevent eligible veterans and military members from taking advantage of this program's benefits. It is important to debunk these misconceptions and be aware of the facts to make informed decisions about home buying.