For first-time homebuyers who qualify for a VA loan, this government-backed mortgage program can be a game changer. VA loans, backed by the U.S. Department of Veterans Affairs, offer competitive interest rates, no down payment requirements, and flexible credit score criteria. However, despite their many benefits, numerous myths discourage eligible buyers from taking advantage of them.
If you’re a veteran, active-duty service member, or eligible spouse, it’s crucial to separate fact from fiction. Here are some of the most common VA loan myths and the truth behind them.
Myth #1: VA Loans Are Only for First-Time Homebuyers
Reality: VA loans are not restricted to first-time homebuyers. Eligible borrowers can use their VA loan benefits multiple times throughout their lifetime. The program allows veterans to use their entitlement repeatedly, as long as they meet the eligibility requirements. Even if you’ve used a VA loan before, you may qualify for another one after selling your previous home or restoring your entitlement.
Key Takeaway: You can use a VA loan more than once, making it a flexible and valuable option for home financing.
Myth #2: VA Loans Have Lengthy and Complicated Approval Processes
Reality: While VA loans have some unique steps, such as obtaining a Certificate of Eligibility (COE), the approval process isn’t necessarily longer than that of a conventional or FHA loan. In fact, VA-approved lenders are well-versed in handling VA loans efficiently. Plus, since VA loans don’t require private mortgage insurance (PMI) and allow for more flexible underwriting, many borrowers find the process straightforward.
Key Takeaway: A VA loan can close in a standard timeframe, and with the right lender, the process is smooth and efficient.
Myth #3: VA Loans Require a Perfect Credit Score
Reality: Unlike conventional loans, which typically require higher credit scores, VA loans have more lenient credit requirements. While lenders set their own minimum credit score thresholds, many accept borrowers with scores in the low 600s or even lower. The VA encourages lenders to consider a borrower’s full financial picture, including income, debt-to-income ratio (DTI), and overall creditworthiness.
Key Takeaway: Even if your credit score isn’t perfect, you may still qualify for a VA loan. Working with a lender familiar with VA loans can help you explore your options.
Myth #4: VA Loans Can Only Be Used for Single-Family Homes
Reality: VA loans offer more flexibility than many buyers realize. You can use a VA loan to purchase:
- Single-family homes
- Condominiums (must be VA-approved)
- Multi-unit properties (up to four units, as long as the borrower lives in one of them)
- Manufactured homes (if the lender allows it)
- New construction (with certain lender-specific requirements)
Key Takeaway: A VA loan can be used for different types of housing, as long as it meets VA guidelines and is intended as your primary residence.
Myth #5: VA Loans Are Only for Active-Duty Military Personnel
Reality: VA loans are available to veterans, active-duty service members, National Guard members, and eligible surviving spouses. Even if you’re no longer serving, you may still qualify based on your service history. The key factor is whether you meet the minimum service requirements, which vary depending on whether you served during wartime or peacetime.
Key Takeaway: You don’t have to be on active duty to qualify—veterans, reservists, and eligible spouses can also benefit.
Myth #6: VA Loans Come with Higher Interest Rates
Reality: VA loans typically offer lower interest rates than conventional loans. Because the VA guarantees a portion of the loan, lenders take on less risk, allowing them to offer more favorable terms. The result? Lower monthly mortgage payments for eligible borrowers.
Key Takeaway: VA loans often come with competitive or even lower interest rates than conventional mortgage options.
Myth #7: VA Loans Have Hidden Fees and Expensive Closing Costs
Reality: VA loans do not have hidden fees, and they often come with lower closing costs than conventional loans. While there is a VA funding fee (a one-time charge that helps keep the program running), many veterans are exempt from paying it, especially those with service-connected disabilities. Additionally, sellers can cover up to 4% of closing costs, reducing the upfront expenses for buyers.
Key Takeaway: VA loans often have lower closing costs, and some buyers may not have to pay the funding fee at all.
Myth #8: VA Loans Take Forever to Close, Making Sellers Hesitant
Reality: While some sellers may hesitate to accept VA loan offers due to misconceptions about long closing times, in reality, VA loans can close just as quickly as conventional loans. With an experienced lender and well-prepared paperwork, many VA loans close within 30 to 45 days—the industry standard.
Key Takeaway: A VA loan won’t necessarily delay closing, and working with a knowledgeable lender can streamline the process.
Myth #9: You Can’t Have More Than One VA Loan at a Time
Reality: You can have more than one VA loan at the same time, depending on how much of your VA entitlement is still available. This is useful for service members who receive Permanent Change of Station (PCS) orders and want to buy a new home while keeping their existing VA-financed property as a rental.
Key Takeaway: If you haven’t used your full entitlement, you may be able to have two VA loans simultaneously.
Myth #10: VA Loans Aren’t Worth It Because of the VA Funding Fee
Reality: While VA loans do come with a funding fee, it’s often a small price to pay for zero down payment, no PMI, and lower interest rates. Plus, many borrowers qualify for exemptions from the funding fee, particularly those with service-connected disabilities.
Key Takeaway: The VA funding fee is often outweighed by the long-term savings a VA loan provides, and many borrowers don’t have to pay it at all.
Final Thoughts: VA Loans Are a Powerful Tool for Eligible Homebuyers
VA loans offer significant financial benefits for veterans, active-duty service members, and their families. However, misinformation can cause some to miss out on this incredible opportunity. By debunking these common myths, first-time homebuyers can make informed decisions and take full advantage of their VA loan benefits.
If you’re eligible for a VA loan, work with a VA-approved lender who understands the program inside and out. With the right guidance, your dream of homeownership can become a reality—without the financial hurdles often associated with other mortgage options.