This BLOG On 7 VA Loan Myths Veterans Need To Know Before Purchasing House Was PUBLISHED On July 13th, 2020
We know that buying a home can be a scary process.
- Many homebuyers in 2020 are using their VA loan for the first time
- Many have not used their VA loan in many years, and the guidelines have changed
- I receive many calls and emails with general questions about VA loans
- It is clear many Veterans have received bad advice about using their VA benefits
- Here are 7 VA Loan Myths Veterans Need To Know Before Purchasing House
- Here are top 7 VA Loan myths I hear from my clients
In this article, we will discuss and cover 7 VA Loan Myths Veterans Need To Know Before Purchasing House.
1. The Government Requires The Seller To Pay Loan Fees
VA Home Loans are the best loan program in the United States. Veterans with Certificate Of Eligibility (COE) certificates can purchase a home with no down payment with 100% financing. There are always closing costs on all loan programs and VA is no different.
- This is not a requirement!
- The seller has the choice to help veterans pay home loan fees
- They do not have to
- They can accept any offer they would like to
In today’s competitive market, many sellers have multiple offers on their homes, and the strongest offer might not ask for any help in paying fees.
2. Sellers Can Pay Up To 4% Of Sales Price For Closing Costs
This is false! The seller can actually contribute up to 4% of the sales price to the buyers’ closing costs plus additional concessions can be offered by sellers. 4% is a common myth. As stated above the VA loan mirrors FHA financing and allows up to 6% seller concessions, per HUD guidelines. Sellers can contribute to veterans’ debt payments as well. We will discuss this on a separate blog on GCA Mortgage News.
3. VA Mortgages Take A Long Time To Close
This is not true either.
- An experienced loan officer and support team should be able to close buyers VA loan within 30 days or less
- Yes, there are a few extra steps in the process such as a termite inspection and the VA issuing a notice of value (NOV) after the appraisal is completed. But that should not add much time
- Most of our loans at Gustan Cho Associates Mortgage Group close in 30 days or less from the time borrowers gets disclosures and acknowledges them
4. The Government Sets VA Interest Rates And Closing Costs
The United States of Veterans Affairs (VA) is not a lender.
- VA does not originate, process, underwrite, fund, service home loans
- The role of VA is to insure and guarantee private lenders who originate and fund VA Loans in the event homeowners default on their loans and foreclose
- VA will insure and guarantee part of the loss lenders take
- Lenders need to make sure all of their borrowers meet VA Lending Guidelines for VA to insure VA Home Loans
- The Government does not set VA interest rates and closing costs
- Interest rates on VA loans are still in line with the Federal Reserve
- Each lender sets their own VA interest rates
This is a very competitive market, so most lenders have similar rates.
5. 7 VA Loan Myths: VA Home Loans Are A Hassle
VA loans are only a hassle when you deal with an inexperienced team.
- The Experts at Gustan Cho Associates have completed hundreds of VA loans!
- We have the process down to 30 days or less!
- We can complete the TBD UNDERWRITING PROCESS for VA loans and speed that process up as well
As long as the loan team is on top of the key parts of the process, such as Termite Inspection, and Issue the notice of value with the VA, your loan process will be as smooth as conventional financing.
6. 7 VA Loan Myths: VA Loan Sizes Are Limited
In general, VA loans used to follow the limits for conforming financing – most counties in America that limit is $510,400. Please see this link VA LOAN LIMITS for a specific county. Veterans can, however, buy a home over that limit, without a down payment needed for JUMBO financing. As of January 2020, the VA no longer has a maximum loan limit on VA Loans. In this example, the veteran will be buying a home over the loan limit for Monroe County in Florida. The loan limit for Monroe county in 2020. There is no maximum loan limit on VA loans in Monroe County or any other counties in the United States.
- We will once again assume the veteran has full entitlement (36,000) and the veteran wants to buy a home for $650,000
- As of January 2020, there is no maximum loan limit on VA loans
As you have learned from the above examples, the maximum guaranty for full entitlement is 100% since there is no maximum loan limit on VA loans.
7. VA Loan Requires 620 Credit Score And Has DTI Caps At 45%
One of the 7 VA Loan Myths is that VA Loans has a credit score or debt to income ratio requirements.
- Credit score requirements create the largest grey area of VA lending. Per VA guidelines, there is not a minimum credit score requirement
- VA loans do not have any credit score or debt to income ratio requirements!
- Each individual lenders sets credit scores for VA Loans
- GCA Mortgage Group has zero VA Lender Overlays
- We just go off Automated Underwriting Findings
- If we get an automated underwriting system approval with a 560 credit score and 60% debt to income ratio, and the borrowers can meet the conditions of the AUS FINDINGS, we will close
- Unlike FHA and conventional financing
- BUT they do care about the last 12 months of borrowers credit profile
Please see Gustan Cho’s blog on VA LOAN REQUIREMENTS for more. Since there is not a credit score requirement, please reach out to the Gustan Cho Associates to get the process started!
Qualifying For A VA Loan With A Lender With No Overlays
Over 30% of all loans at GCA Mortgage Group we originate and fund are VA Loans. The team at Gustan Cho Associates closes 100% of all of his pre-approvals. This is because all of our pre-approvals are 100% loan commitments to the lender that has been fully underwritten and signed off by our mortgage underwriters. To start the pre-approval process, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at firstname.lastname@example.org. The team at GCA Mortgage Group is available 7 days a week, evenings, weekends, and holidays.