Dispelling 5 myths about VA loans
Home ownership. It’s a dream for everyone, yet can sometimes feel impossibly far away. But for qualifying veterans and their families, VA loans can jumpstart the 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. But with so many financing options out there, there can be a lot of confusion about how VA loans work and what sets them apart. Here are answers to five of the biggest myths surrounding VA loans.
1: All VA loans require a down payment.
- For VA loans either at or under the local conforming limit ($453,100 for most of the country and up to $679,650 in high-cost areas), down payments are an option, 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.
2: VA loans are viewed as risky.
- Private mortgage insurance is waived for all VA loans. PMI typically adds 0.2-0.9% of expenses to your monthly mortgage payments when you put less than 20% down. That’s a big additional expense you don’t have to worry about.
3: VA loans are difficult to qualify for.
- VA loans allow a higher debt-to-income ratio and afford more leniency with your credit score. Reduced restrictions mean easier qualification.
4: Loan terms are fixed in stone.
- Thanks to VA streamline and cash-out loan programs, VA loans are actually easier to refinance than conventional mortgages. The streamline version lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest. This means it doesn't require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.
5: VA loans only apply to the home purchase itself.
- The VA allows for new construction loans and increases to purchase loans for renovation or home improvement projects. The VA’s Energy Efficiency Improvement program lets borrowers add up to $6,000 to their home loan amount to install solar heating, insulation, storm windows and more.
Now that you know more, you can start to consider which VA loan might be right for you. One option is our Zero Down for Heroes program, this exclusive 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!