The Top 5 Misconceptions About VA Home Loans
Veterans and active military members have access to some of the best home loans available. The most common question asked by veterans and active-duty military members is, “What are the benefits of a VA home loan?”
The answer can be complex. The main benefit is these loans give military members access to competitively low interest rates and more flexible terms comparatively. However, there are also a few misconceptions about VA loans that should be cleared up. Here’s a look at the top five.
5 Misconceptions About Securing VA Loans
Having access to a VA loan helps make the home buying process easier and more financially secure for members of the military. But many veterans don’t understand the process, or they have incorrect information about the VA home loan program. Military Homespot can provide that clarity, let’s review.
#1: You Have to Be a Veteran to Qualify for a VA Loan
The truth is anyone who serves or has served in the U.S. Armed Forces are eligible for a VA loan. This includes active-duty personnel, reservists, National Guard members, and veterans. Even spouses of deceased service members may be eligible for a VA loan as long as they meet other eligibility requirements.
#2: VA Loans Require a Down Payment
Another popular misconception about VA loans is that you need to put down money in order to qualify for one. This is simply not true; you can actually get a 100% financing loan with no money required as a down payment.
VA loans do not require a down payment, however, you may still choose to put one down if you wish. Many lenders allow you to use gifts from family members or grants from nonprofits for your down payment. This could make it easier for veterans to purchase their first homes than with traditional loans requiring a 20% down payment.
It is true that VA home loans may require little to no money down when compared to conventional loans. While complete financing is a potential, there may still be money required upfront to purchase a home. The exact amount depends on your specific situation and the type of property you are purchasing. Typically borrowers must put down at least 3% of the purchase price in order for their loan to be approved.
#3: There Are Too Many Restrictions
Many veterans and active military may feel there are too many restrictions to how they may utilize their VA loan. Limitations such as what kind of property can be purchased, how to use their benefits or even how their credit and income come into play.
You Can Only Use Your Benefits Once
Many military members use their benefits multiple times throughout their lifetime in order to purchase more homes or refinance existing ones. As long as you remain eligible according to the Department of Veterans Affairs (VA) guidelines, there are no limitations on benefits.
You Can Only Buy an Existing House
VA home loans are not just limited to existing houses. Borrowers can buy new construction homes or even fixer-uppers with these loans as long as certain requirements are met. Homeowners can use their loan benefits more than once if desired, meaning veterans could buy multiple properties using their VA benefits.
Restrictions on Where You Can Buy Property
In most cases, there are no restrictions on where veterans can buy property using their VA benefits. Some restrictions may apply depending on where they intend to live after buying the property (such as when buying rental properties).
Each state may have additional restrictions regarding which types of properties they will allow borrowers to purchase with their VA benefits (such as condos vs single-family homes). Your lender should be able to provide more information about these restrictions prior to closing on a home.
You Must Have Perfect Credit to Qualify
The truth is that you do not need perfect credit to qualify for a VA home loan. While good credit certainly helps secure lower interest rates, borrowers with less-than-perfect credit can often qualify with the right lender. It's important to note, however, that your debt-to-income ratio (DTI) may still affect your eligibility.
Your Loan Amount Will Be Limited by Your Income
Your income doesn’t necessarily dictate how much you can borrow when purchasing or refinancing a home through a VA loan program. Instead, lenders will consider factors such as debt-to-income ratio and credit score to determine how much money they're willing to lend.
#4: All Lenders Provide The Same Terms For A VA Loan
Different lenders offer different terms for their VA mortgage loans. Veterans should shop around before settling on one lender or another when applying for a loan. Factors such as interest rates and fees vary significantly between lenders. It pays to compare offers from multiple banks before making your decision. Some lenders specialize in providing loans specifically tailored toward specific military populations. Be sure to explore all available options before committing yourself to any one lender's terms.
#5: Applying For A VA Loan Is Difficult And Takes A Long Time
Applying for a VA loan doesn't have to be difficult. Many applicants find the application process to be straightforward if they work with an experienced lender who understands the financial ins-and-outs. Plus, thanks to advances in online technology, applications can now often be completed entirely online. This helps streamline the process even further and reduce the amount of time needed for approval from weeks down to days.
Debunking Misconceptions About VA Home Loans
Veterans and active-duty military members deserve access to affordable mortgage solutions, thankfully, that's what they get when choosing a VA loan. With competitive interest rates and flexible terms available through these programs, combined with all of the myths debunked here, it’s easy why so many people choose this option when looking for mortgage solutions. By knowing exactly what myths are out there regarding these special loans, you’ll be able to make an informed decision about whether or not this type of financing solution is right for you.
Understanding these myths can help ensure that you get the most out of your benefits when applying for financing. With this information in hand, plus help from an experienced lender, you'll be well on your way towards securing the perfect mortgage solution tailored just for you!