VA Loan Myths Busted

By July 1, 2019 Loan Programs

The 5 most common VA loan myths debunked.

Sometimes we let rumors get the best of us. It’s human nature. We hear things from not-so-reliable sources and take them as truth all the time, whether it has to do with sports, education, finance, or just life in general. The mortgage industry is no different. VA loans have been the subject of many myths and rumors over the years, especially in military circles. So we’re here to debunk some of these myths you’ve probably heard as you’ve asked around about the VA loan process. VA loans have been the subject of many myths and rumors over the years, especially in military circles.

1. MYTH: YOU NEED PERFECT CREDIT TO GET A VA LOAN

Fact: Most lenders are looking for at least a 620 credit score for a VA loan. 

FICO credit scores range from 300 to 850 with 850 being a “perfect” score, so this myth gets debunked pretty easily. In 2016, the average FICO score for Conventional loan purchasers was 737. If a perfect score is 850, and the average Conventional score is 737, 620 doesn’t sound too bad, does it?

2. MYTH: ONLY COMBAT VETERANS ARE ELIGIBLE

Fact: Veterans, active duty servicemembers, reservists, National Guard members, surviving spouses, and other individuals can earn eligibility for home loan benefits. You may qualify if you are:

  • Military veteran
  • Active duty servicemember
  • Reservist or National Guard member
  • Surviving spouse who did not remarry
  • Academy cadet or midshipman
  • National Oceanic and Atmospheric Administration (NOAA) officer
  • Public Health Service (PHS) Officer

In order to obtain a VA loan, you’ll need a Certificate of Eligibility, which you can apply for online.

3. MYTH: YOU CAN ONLY GET A VA LOAN ONCE

Fact: If you are deemed eligible for a VA loan, the benefit is yours for life, and in some cases, it can be used multiple times at once. Many veterans use it repeatedly for their home financing needs. Use it for a starter home, then use it again when you’re ready for more space. THEN you can use it again to refinance your loan for a lower rate or get cash out of your home’s equity. It’s completely up to you.

4. MYTH: VETERANS ARE GUARANTEED A VA LOAN

Fact: No one is guaranteed a loan. Even veterans with VA entitlement.

The word “guaranty” comes up a lot when talking about VA loans. Well, I’m here to tell you that a “guaranty” and a “guarantee” are not the same thing. Many people assume when they see “VA loan guaranty” that they’re guaranteed a VA loan, and that’s simply not the case.
The VA loan guaranty refers to the amount of each VA loan that is backed by the government (usually 25%). If the loan defaults, the amount under guaranty is refunded to the lender by the government. So just because you see guaranty, doesn’t mean your loan is guaranteed to be approved.

5. MYTH: THE VA APPRAISAL PROCESS TAKES TOO LONG

Fact: The VA appraisal process can be rough if you’re pursuing a home that’s in rough shape. Otherwise, the VA appraisal process isn’t much different from the average Conventional appraisal.

VA loan appraisers use the VA’s “Minimum Property Requirement” guidelines to determine if a home is safe, structurally sound, and sanitary. If the home doesn’t meet their standards, the process can take a while. That’s why it’s important to choose your home wisely. A few of the MPRs include:

  • Plumbing and electrical systems must be safe and in good condition
  • Heating must be adequate
  • Roofing must be adequate
  • No leaks, excessive dampness, defective construction, or decay
  • No termites, destructive insects, fungus growth, or dry rot

Does this sound like your home? Well then, you should be fine. VA loans aren’t designed to fund fixer-uppers. The VA wants veterans and servicemembers to buy solid, move-in ready homes, not projects. That being said, if you choose a home that’s in good condition, you shouldn’t have any problems with the appraisal process. The VA wants veterans and servicemembers to buy solid, move-in ready homes, not projects.

Article written by Khari Pressley and reprinted with permission by Cardinal Financial