The Top 3 VA Loan Myths that Keep Service Members from Using Their Benefit

Applying for a Loan. Wooden Home pictured.

Department of Veterans Affairs loans are designed to make the dream of home ownership possible for veterans and current service members. Since the program began with the GI Bill in 1944, the government has backed more than 25 million home loans for those who have served their country. 

Despite the fact that nearly half of the mortgages Navy Federal Credit Union originates are VA loans, there are a significant number of veterans and service members who are eligible for this product and its many benefits, yet don’t take advantage of it.

To address this issue, Navy Federal recently surveyed a thousand service members and veterans about their thoughts and feelings on home ownership and VA mortgages. The report, which reveals some of the common misperceptions keeping service members from using their full VA loan benefits, found that more than a quarter of respondents who have taken out a mortgage haven’t used a VA loan. Here’s why:

Myth #1: VA Loans Require a Down Payment

On average, veterans believe a down payment of 12% is needed for a VA loan, while active-duty service members say 28% is needed. In reality, when using a VA loan to purchase a home, there are options available that require no down payment.* This fact alone can be a huge boost for most homebuyers’ purchasing power, especially in today’s competitive market. 

Myth #2: VA Loans Have Higher Rates

As inflation and interest rates rise, homebuyers are increasingly concerned about finding an affordable home. Nearly half of active-duty survey respondents thought VA loans have a higher interest rate than conventional loans. But that’s usually not the case, as VA loan interest rates tend to average about 0.25% to 0.5% lower than conventional mortgages when comparing apples to apples.

“VA loans can make home buying and homeownership much more cost effective for veterans and service members than traditional loans,” said Rashalon Hayes, assistant vice president for field mortgage originations at Navy Federal. “Keep in mind, the "headline rate" - or the interest rate you see listed - isn’t the whole story. You should look for lenders with lower fees and no private mortgage insurance requirements, which can add on significant costs.”

Myth #3: VA Loans Are Too Much of a Hassle

There’s a common belief that these types of loans are just too complicated and cumbersome to get. However, people who secured a VA loan are overwhelmingly happy with the process. Asked how satisfied they were with the process of obtaining a VA loan, with one being very dissatisfied and seven being very satisfied, 80% of respondents in our research reported a score of six or seven.

“The VA home-buying process can be smooth, especially when you’re using lenders like Navy Federal, who are familiar with the process,” Hayes said. “The reality is that VA-backed mortgages remain one of the best tools available to military-affiliated buyers, even in today’s highly competitive housing market.”

So now that you’ve learned the facts about VA loans, what are the qualifications needed to get one?

If you’ve served 90 consecutive days of active service during wartime, 181 days of active service during peacetime or you have six years of service in the Reserves or National Guard, you qualify for a VA loan. Additionally, spouses of service members who have died or been injured in the line of duty are also eligible.

VA loans remain one of the most cost-effective ways for eligible Americans to purchase a home. Homebuyers interested in exploring this benefit should talk with a lender or their real-estate agent to find out whether VA loans are right for them.

Take Advantage of a VA Loan Today!

The first step in a purchase or refinance with a VA loan is to get rate quotes from multiple lenders. Often, your lender will then guide you through the rest of the process, from COE to closing.

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