Answering your questions about VA home loan myths

Having access to VA home loans (VAHL) is one of the main advantages associated with being in the military. VAHL has a low or no down payment and offers 100% mortgage financing and refinancing and flexible credit guidelines. Many new borrowers who qualify for VAHL don’t even apply because they believe many of the half-truths out there. Because the rules and requirements for VAHLs are constantly changing, every time they are canceled or changed, word doesn’t always get out. As a result, misconceptions about the VAHL program run rampant. Here are some of the most common myths about the VAHL program debunked.

You must be on active duty to qualify for a VA home loan

You do not have to be on active duty to qualify for a VAHL. Your eligibility for a VAHL is determined by your current and past service. Simply put, veterans who have served at least six months between 1964 and the present are likely to be eligible for VAHL.

Veterans automatically qualify for VAHL

Just because you’re eligible for a VAHL doesn’t mean you’ll be able to get one. Obtaining a Certificate of Eligibility is only half the battle. Generally, you must have a debt-to-income ratio of less than 41% and good credit if you want your VAHL application to be approved.

VA Home Loan Financing Fees Are Expensive

The VA financing fee is a one-time fee required by law and is currently 2.15% on loans with no down payment for first use and 3.3% for second-time users with no down payment. The financing fee is reduced when you make a down payment. Some claim the financing fee is expensive, but it’s actually less expensive in the long run than the private mortgage insurance it replaces. If you apply for a conventional mortgage, lenders will require you to have private mortgage insurance if you pay less than 20% down. Private mortgage insurance typically costs between 0.5% and 1% of the total loan amount annually.

VA home loans take longer to close

Many people assume that VAHLs take longer to close than conventional loans, but that is simply not true. The decision whether or not to approve a loan is left to private lenders, so the application process for a VAHL does not take much longer than the application process for a conventional home loan. It is rare for the VA to have to step in and review a loan application. In most cases, VAHL can be closed within a month.

Every real estate agent knows about VA home loans.

There is no such thing as a VA certification for realtors. Therefore, you should not rely on most real estate agents for VAHL advice. Look for a lender whose majority product is VA-backed loans if you want your lender to be aware of the VAHL process.