VA Home Loan Benefits and Myths


Veterans Affairs (VA) home loans let military service members finance the purchases of their primary residences without down payments. Qualification for a VA loan is just one of the many perks of military service, but often, eligible applicants aren't aware of the loans or don't fully understand the benefits they offer. According to the government's own research from 2009, nearly 20% of eligible service members weren't aware that they qualified for a VA home loan. What's more, of the 24 million veterans alive in 2009, only 10% of them had ever taken advantage of this benefit.

VA Home Loan Myths

Since our homes are typically our largest purchases and potentially our largest assets, it's important for eligible service members to know all the tools and resources they can leverage. Let's start by dispelling a few myths. (See also: The 7-Year Mortgage: Take It or Leave It?)

1. A VA loan benefit may only be used once.

On the contrary, the benefit is reusable and service members can qualify for another VA loan once the original is paid off.

2. The home must be purchased in the veteran's name alone.

Not true. A home purchased using a VA loan may be held in both the service member's name and the name of his/her spouse.

3. VA home loans are only available to active service members.

Wrong again. Retired or discharged service members may also qualify based upon length of service and type of discharge received. Whether active or non-active, applicants must obtain a Certificate of Eligibility — the first step in determining qualification for the loan.

4. Reservists don't qualify for VA home loans.

Not necessarily. Eligibility extends to any service member who has successfully completed a total of six years in the Selected Reserves or the National Guard and received an honorable discharge. Service members with less than six years of service may still be eligible if discharged due to a service-related injury or disability.

5. VA loans can only be used for single-family, detached homes.

Nope. VA loans can be used to buy a condo, town home, or manufactured home.

VA Home Loan Benefits

So now that we've gotten the myths out the way, let's explore some of the benefits that VA loans offer. In our current upside-down real estate market with some homeowners just treading water and a whole new crop of jittery buyers, these benefits just might make all the difference.

  • A VA home loan typically allows qualified buyers to purchase a home with no down payment.
  • A VA loan does not require borrowers to pay PMI (Property Mortgage Insurance) premiums.
  • The loan puts limits on the amount of closing costs that buyers are required to pay.
  • A VA loan provides a home inspection at no cost to the buyer.
  • A VA loan provides periodic construction inspections for homes that are being built and requires the builder to provide the buyer a one-year home warranty.
  • A VA loan allows buyers to pay off their loans early, without pre-payment penalties.
  • The Veteran's Administration provides personal loan servicing, which includes financial counseling for borrowers experiencing temporary financial hardship.

Whether you're fresh out of the service and looking to leverage your VA home loan benefit for the first time or using it for the fourth time, it's important to separate fact from fiction. While I've covered some of the highlights here, more specific guidelines on eligibility, benefits, and the application process are available. Check out this VA home loan fact sheet to learn more about making the most of this benefit.

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Meg Favreau's picture

Have any readers taken advantage of VA home loans? If so, what was your experience like?

Guest's picture

VA loans also allow you to transfer your interest rate to another service member if you sell your home to them. A great perk if you locked into a great rate.

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