Having access to VA Home Loans (VAHL) is one of the main advantages associated with being in the military. VAHL has low or no down payment and offers 100% mortgage financing and refinancing and flexible credit guidelines. Many new VAHL-qualified borrowers don’t even apply because they believe many of the half-truths out there. Because the rules and requirements for VAHLs are constantly changing, every time they are canceled or changed, word doesn’t always get out. As a result, misconceptions about the VAHL program run rampant. These are some of the most common myths about the VAHL program debunked.
You must be on active duty to qualify for a VA home loan
You do not have to be on active duty to qualify for a VAHL. Your eligibility for a VAHL is determined by your current and past service. Simply put, veterans who have served at least six months between 1964 and the present are likely entitled to VAHL.
Veterans automatically qualify for VAHL
Just because you are eligible for a VAHL does not mean you will be able to get one. Obtaining a Certificate of Eligibility is only half the battle. Generally, you must have a debt-to-income ratio of less than 41% and a good credit history if you want your VAHL application approved.
VA Home Loan Financing Fees Are Expensive
The VA financing fee is a one-time fee required by law and is currently 2.15% on loans with no down payment for the first use and 3.3% for second-time users who do not make a down payment. The financing fee is reduced when you make a down payment. Some say the finance fee is expensive, but it’s actually less expensive in the long run than the private mortgage insurance it replaces. If you apply for a conventional mortgage, lenders will require you to have private mortgage insurance if you pay less than 20% down. Private mortgage insurance typically costs between 0.5% and 1% of the total loan amount annually.
VA home loans take longer to close
Many people assume VAHLs take longer to close than conventional loans, but that’s simply not true. The decision whether or not to approve a loan is left to private lenders, so the VAHL application process doesn’t take much longer than the conventional home loan application process. It is rare that the VA has to step in and review a loan application. In most cases, VAHL can be closed within a month.
Every Realtor Knows About VA Home Loans
There is no such thing as a VA certification for realtors. Therefore, you should not rely on most real estate agents for advice on VAHL. Look for a lender whose majority product is VA-backed loans if you want your lender to know about the VAHL process.