Qualified Home Loans

Homebuying as a Veteran & some myths about VA loans

Homeownership is a dream for almost everyone, yet can sometimes feel impossibly far away. But for qualifying veterans and their families, VA loans can help jumpstart your path to home ownership by offering exclusive (and often overlooked) benefits. Because they are backed by the US government, VA loans carry unique advantages that separate them from conventional loans. There can be a lot of confusion about how VA loans work and what sets them apart. Here are your answers to some of the biggest myths surrounding VA loans.

Myth #1: All VA loans require a down payment.

In most cases, VA Loans are available with no down payment. While conventional loans generally require down payment options that can reach up to 20%, no such thing is required with a VA home loan at or under the local conforming limit. Down payments are still an option, of course, but they are not a requirement. The VA allows you to purchase jumbo loans, but requires you to supply 25% of the difference between the loan amount and the loan limit.

Myth #2: It is difficult to qualify for a VA loan

VA loans have fewer credit restrictions compared to conventional loans. These reduced restrictions, like a higher debt-to-income ratio and more leniency regarding credit scores, mean it can be easier to qualify. We typically qualify borrowers with credit scores under 700, though each individual case and lender will vary.

Myth #3: Loan terms are fixed

Thanks to VA streamline and cash-out loan programs, VA loans are actually easier to refinance than conventional mortgages. While many people are aware of the benefits of a VA Loan, fewer people know of the great opportunities of refinancing with the Interest Rate Reduction Refinance Loan (IRRRL). The IRRRL – or the streamline refinance loan – is a type of refinance loan specifically designed for homeowners who have purchased their house with a VA Loan. If you’re a current VA Loan homeowner and are looking for a more affordable mortgage, a lower mortgage interest rate, or a more consistent monthly payment, an IRRRL is a great option. Like traditional loan refinances, an IRRRL helps you to lower your interest rate to the market value and in turn can reduce your monthly mortgage payments. Since a streamline refinance lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest, it doesn’t require a credit check or appraisal.

Myth #4: VA loans only apply to the home purchase itself.

The VA allows for increases to purchase loans for the purpose of making renovations. The VA’s Energy Efficiency Mortgage program, for instance, lets borrowers add up to $6,000 to their home loan amount to install solar heating, insulation and storm windows, among other features.

Now that you know more, you can start to consider which VA loan might be right for you. Currently our VA program requires no down payment or PMI on conforming, primary residence loans. Contact us to learn more about our unique VA benefits—we’d love to learn more about you so we can help you achieve your financing goals!