APM BLOG

The VA home loan program is an amazing benefit for our deserving active-duty service members, veterans, and surviving spouses of veterans. While no one could ever repay you for the sacrifices you’ve made, the VA home loan can make your dreams of homeownership just a little easier to achieve.

This program is part of the GI Bill, which President Franklin D. Roosevelt signed into law in 1944. At that time, a VA mortgage loan maxed out at $2,000, with half of that guaranteed by the government.

As you can imagine, a lot has changed since then. Most of these changes have been positive, providing even more benefits to eligible VA borrowers. But they’ve also created some confusion and unwarranted assumptions. The last thing we want is for anyone to fall victim to VA loan myths.

So take a few minutes to separate fact from fiction. This can help ensure that these common VA home loan myths won’t derail your American dream.

VA Funding Fees

MYTH: The VA funding fee will make my loan payments high.

While there are many benefits to the VA home loan program, there are also fees and closing costs involved—just like with all mortgages. The biggest difference in the VA funding fee is that it is a one-time upfront fee that you can pay in multiple ways. 

You can wrap it into the loan amount to pay it with a small increase to your monthly payment. But you can also pay it upfront on your own or with gift funds from a friend or family member. 

However you pay it, it doesn’t come close to the monthly fees on conventional loans, such as PMI, which can run hundreds of dollars per month.

VA Loan Timeline

MYTH: VA loans have a lot of red tape and take longer to close.

VA loans tend to take about the same amount of time to close as a standard conventional loan or FHA loan. The biggest factors involve getting pre-approved, getting your Certificate of Eligibility (COE) as soon as possible (we can help with this), and finding a home that meets the criteria for a VA home loan.

Sometimes, appraisals in more rural areas take longer because of a shortage of VA appraisers. Additionally, any appraisal repairs marked as “subject to” must be completed before closing.

Jumbo Financing

MYTH: Jumbo financing is not available for VA loans.

VA offers jumbo loans, but technically they’re not called “jumbo,” as it’s all based on eligibility and entitlement. While there’s no hard loan limit, in most cases, lenders will go as high as a $2 million loan amount if the veteran qualifies.

Multiple VA Loans

MYTH: You can use your VA home loan benefit only once, or you can’t purchase a second home with a VA loan if you already own a home.

You are absolutely able to use your benefit more than once, and you can even use it for multiple VA loans. The only limit is the amount of your entitlement. You can use it for another home if you have more entitlement left. If you use your benefit and then sell your home, then the entitlement is fully reinstated.

If you’re a service member, veteran, or eligible surviving spouse, the VA home loan benefit is here for you, period. Becoming a landlord and earning rental income is part of the American dream for many people, including our military heroes.

Whether you’re looking to downsize or expand, you are welcome to purchase a new home with a VA mortgage, even if you also financed your current home through a VA loan.

Foreclosures and VA Loans

MYTH: I can’t get another VA home loan because I lost my entitlement in a foreclosure.

Here’s a truth bomb for you: Service members, veterans, and eligible surviving spouses can use their VA entitlement again, even if they’ve fallen on hard times. You can purchase a home using a VA loan as soon as two years after a foreclosure or bankruptcy. Since part of your entitlement was “lost” through foreclosure, there may or may not be a requirement for a down payment because there’s only partial entitlement remaining.

We know this process can be tricky, which is why our trusted APM Loan Advisors are here to help you navigate the VA loan process, regardless of your circumstances.

VA Loan Costs

MYTH: VA loans cost more than conventional financing.

VA loans typically have fewer costs for all involved in the transaction. When you’re refinancing, there can be significant savings in having a VA home loan. The VA interest rate reduction refinance loan (IRRRL) (sometimes referred to as a streamline refinance) allows borrowers to refinance at a lower rate with lower costs and no lender fees.

Additionally, VA loans offer a low-cost VA streamline refinance that can:

• Lower interest rate and monthly payment amount: Lowering your monthly payment gives you some breathing room by taking the pressure off your budget, which is working hard enough.
• A new mortgage structure: Switching from an adjustable-rate mortgage to a fixed rate can provide stability and peace of mind.
• Cashing out equity: A VA streamline can allow you to convert some of your home’s equity into cash, which can be used for anything you need or want.

Regarding purchase loans, while it is true that the program allows sellers on home purchases to pay the VA funding fee, it’s not a requirement. The funding fee is typically a fraction of the cost a seller might contribute on a conventional loan.

All fees charged on VA loans are regulated by the federal government and the Department of Veteran Affairs and are typically lower overall than those charged on other loan types. 

VA Home Loan Requirements on Eligibility

MYTH: The VA home loan benefit is only for those who have served and are out of the military.

VA loans are available to anyone who meets the eligibility requirements, including those in active service, veterans, veterans with service-connected disabilities, and surviving spouses.

If you are still serving but have met the requirements, you are absolutely able to use your benefit. If you’re living off base you can even use your basic allowance for housing toward your home loan payments.

We know there are other VA home loan myths out there, which is why we’re happy to walk you through your loan options and the process of deciding whether a VA loan works for you.

Click here to connect with an APM Loan Advisor and VA specialist in your area, and we’ll set the record straight once and for all.

Disclaimer: Rates, terms, programs and underwriting guidelines subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Equal Housing Opportunity