There’s a laundry list of myths and misconceptions surrounding VA home loans.
Some of the most pervasive are rooted in dollars and cents. But other common misconceptions hit on things like eligibility, multiple purchases and the safety of these $0 down loans.
Whether it’s a single myth or a compilation, often outdated or flat-out bad information can keep veterans and military members from exploring their hard-earned home loan benefits.
Here’s a quick look at four VA loan myths that hold buyers back.
Myth #1: VA loans cost more.
Reality: Interest rates, upfront expenses and closing costs aren’t inherently more with VA loans. In fact, rates are often competitive with if not below conventional; there’s no down payment requirement; and the VA limits what borrowers can pay in closing costs.
This myth also evaporates when you compare monthly mortgage payments among the major financing options.
VA loans don’t carry any kind of mortgage insurance, a benefit that can make a big difference each month. FHA financing is especially tough because of that added expense. Conventional loans usually require private mortgage insurance unless buyers can make a 20% down payment.
Myth #2: This is a one-time benefit.
Reality: Qualified borrowers can use the VA loan program over and over again. It’s even possible to have more than one active VA loan at the same time.
It’s also not a benefit exclusively for veterans. Active duty service members and select surviving spouses can also utilize this historic home loan program.
Myth #3: They limit purchasing power.
Reality: There’s no cap on how much veterans can borrow when using their home loan benefit. Qualified buyers can borrow as much as a lender is willing to extend, all without a down payment.
Veterans with diminished VA loan entitlement might need to make a down payment in some cases. Still, there aren’t restrictions about how much home you can buy.
There’s a thriving VA jumbo market out there, too.
Myth #4: These are risky loans.
Reality: About 8 in 10 VA buyers purchase with no money down. Despite that, VA loans have had the lowest foreclosure rate of any loan on the market for most of the last 16 years.
Common-sense underwriting and the VA’s commitment to keeping veterans in their homes are the biggest reasons why.
Want to learn more? Check out our Veterans Guide to Homeownership and get started on your home-buying journey.
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This article was written by Chris Birk, Director of Education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”
