Many things in the military are well planned and orderly. But when it comes to buying a home, there is no clear road map or training regimen provided. You may have heard about Veterans Affairs Home Loans, better known as VA loans, but are confused about what they are.
VA mortgages are available to most active duty service members, military veterans, members of the Reserve or National Guard, and eligible surviving spouses. They’re offered through private lenders, like Wells Fargo, but are guaranteed by the U.S. Department of Veterans Affairs.
There are some myths out in the marketplace about these unique loans.
Here’s what you need to know about the reality of VA mortgage loans.
Myth 1: I can only use my VA loan benefit to purchase a home once.
Reality: The VA loan guaranty benefit can be used more than once to purchase a primary residence. As long as you pay off the loan each time, you can use your full VA entitlement multiple times.
Myth 2: There is a maximum loan amount.
Reality: There is no imposed maximum amount that you can borrow using a VA loan, but there is a limit to the size of the loan an eligible borrower can secure without making a down payment. For 2020, that amount is $510,500 in most markets; however, in certain geographic areas, higher loan amounts may be available. More information on loan limits can be found on the VA’s website.
Myth 3: VA loans are only available for first-time homebuyers.
Reality: VA loans are not just for first-time homebuyers. In fact, it’s a great last-time homebuyer product: For example, if you’re downsizing in retirement and don’t want to provide a lot of cash out of pocket, you can use your VA loan benefit and maintain a certain level of liquidity.
Note that only primary homes — not investment or vacation homes — can be purchased using your VA loan benefit. However, a VA home loan can also be used to repair or improve an existing home, refinance a current mortgage, or make home upgrades and efficiencies.
Myth 4: VA loans require a perfect credit score.
Reality: The VA loan program provides for a flexible range of qualifying guidelines. If your credit report isn’t perfect, you shouldn’t abandon your dreams of homeownership. Talk to a mortgage consultant who can help you understand your options.
Myth 5: If my deployment situation changes, I won’t be supported.
Reality: The Servicemembers Civil Relief Act (SCRA) may offer protection or relief to members of the military and their families. This includes foreclosure protection, fee protection, a special loan modification program for those facing financial challenges, and a reduced mortgage interest rate without fees or refinancing.
Lenders like Wells Fargo also have a team of qualified mortgage consultants that understand the military culture and can advise you on your mortgage options. Talk to a military lending specialist to find out if you qualify, then apply today.