va home loan mythsOne of the most valuable benefits of military service is a VA home loan. Yet, according to government data, fewer than 12% of the country's estimated 24 million current service members and Veterans are currently using their VA loan benefits. Part of the reason for the low usage rates can be traced to incorrect assumptions about VA loans. Let’s bust some myths.

Myth #1: VA home loans are more expensive.

According to a new Spotlight on VA Loans report commissioned by Navy Federal Credit Union and Operation Homefront, 49% of active-duty respondents believe VA loans have higher interest rates than conventional loans. This is almost always not true. points out that “with full entitlement, there is no down payment and the VA backs loans up to $144,000. With amounts over that limit, the VA will pay the lender up to 25% of the loan amount. With these protections in place, lenders usually offer a VA home loan at 0.5% lower than conventional loans. The VA also limits the origination fee to 1% of the mortgage, which means closing costs are often lower.

Myth #2: It takes more time to process a VA home loan.

“In reality, we don't see any significant difference in closing times [between a VA loan and a conventional loan]” Kevin Parker, vice president of field mortgage originations at Navy Federal noted in an interview with Forbes magazine. “At Navy Federal, it typically takes about 30 days to close. There’s also an idea that there’s more paperwork required — proof of income and assets, for instance — and more bureaucracy to deal with. Aside from the borrower’s certificate of eligibility, the paperwork is basically the same for a VA loan and a conventional mortgage.”

Myth #3: You can use a VA home loan only once.

Actually, your VA home loan eligibility is reusable depending on the circumstances. The VA says “Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the Veteran must send a completed VA Form 26-1880 to our Atlanta Eligibility Center.” The VA loan benefit never expires; regardless of how many times a borrower uses it.

Myth #4: A VA loan doesn’t have many advantages over a conventional mortgage.

A VA loan offers many additional benefits:

  • The VA doesn’t have a minimum credit score for the mortgages it backs.
  • VA loans require no private mortgage insurance, which can save Veterans hundreds of dollars a month.
  • They have special criteria for inspections and appraisals.
  • They’re backed by the government, which adds an extra degree of comfort for home buyers.


Sean D. Cuddigan
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SSA and VA Disability Attorney in Omaha, Nebraska
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