Since the days of the Second World War, the Veterans Administration has given millions of military members the chance to realize the American dream of homeownership. VA loans are not issued by the government, but rather through private banks. What makes VA loans so attractive to lending institutions is that they are guaranteed and insured by Uncle Sam. Despite VA loans being around for many decades, there still exists a lot of misunderstandings about them and how they work. Here are some of the most common myths about VA loans and the information you need to help obtain one.
- You need a perfect Credit Score
- Only Certain Types Of Veterans Are Eligible
- VA Home Appraisals Take A Long Time
- The Types Of Homes You Can Buy Are Limited
- VA Loan Rates Are Much Higher
- Closing Costs Are Expensive On VA Home Loans
- Apply For A VA Loan
VA Loan Requirements – You Need A Perfect Credit Score
The Veterans Administration does not require a high credit score in order to obtain a VA loan. Each lending institution has their own underwriting criteria to determine who can be approved under the program. When it comes to the VA’s loan approval requirements in the areas of income, debt, and credit, lenders are asked to be flexible when reviewing an eligible person’s application. Generally speaking, credit scores of 620 and above are acceptable to obtain a VA loan.
Only Certain Types Of Veterans Are Eligible
Often times it is thought that only certain categories of military personnel (like combat veterans) can obtain a VA loan. This is not true. Upon approval, the following people can all receive a VA-backed loan through a private lender.
- Honorably Discharged Veterans
- Active Duty Personnel
- National Guard or Reservist Members
- Academy Students
- Surviving Spouses
- Public Health Officers
- NOAA Officers
VA Home Appraisals Take A Long Time
VA loans are not issued by the government, but rather through private banks.
Not true! There is nothing about the VA loan process that would cause a home appraisal to take longer than one being done under a conventional lending arrangement. Once a home purchase contract has been signed, the VA will send out one of their approved appraisers to complete the process. The VA states in their policies that an appraisal can take between 7-28 business days to complete. However, in many cases, a shorter amount of time is the norm.
The Types Of Homes You Can Buy Are Limited
Many people believe that the VA will only back loans for military people who want to buy a single-family home. This is not true. The list of eligible properties to buy under the VA program include the following:
- Single Family Homes
- Condo Units
- New Construction
- Multi-Family Properties
- Manufactured Homes
VA Loan Rates Are Much Higher
When it comes to interest rates, VA-backed loans are extremely competitive with other types of lending programs. In fact, VA rates can often be lower because the risk to the lender is minimized. No matter what kind of loan you obtain for a home purchase, the interest rate will always be based on market conditions and your individual financial situation.
Closing Costs Are Expensive On VA Home Loans
False! Many people do not realize that VA loans have many unique benefits as compared to conventional loans, such as no requirement for PMI (private mortgage insurance) and zero dollar down payments. In fact, since the inception of the program, the VA states that nearly 9/10 loans have been completed with no down payment. These unique features can make the out-of-pocket costs involved in purchasing a home a lot more manageable.
Apply For A VA Loan
Since 1944, the Veteran’s Administration has helped millions of current and retired service people purchase a home of their own. VA loans are an ideal way for individuals who have served our country to experience the pride of homeowner ownership. The mortgage experts at Better Lending have many years of experience as a VA lender and can help you get started today. Contact us to learn more about why so many veterans and active-duty military personnel have chosen us to be their trusted VA loan partner.
The concept of mortgage points that we’ll discuss here refers to credits a borrower can pay in exchange for a lower interest rate.
Mortgage closing costs can comprise any number of expenses above a home’s purchase price. See what’s included.
USDA mortgages are especially attractive because no down payment is required and there is no minimum credit score to be eligible.