Money Monday: 5 Things You Probably Don’t Know About VA Loans

I had my first clients buy a home with a VA loan in December.  VA loans are obviously not for everyone, but there are many misconceptions about these loans that happen with not only the general public, but also with industry professionals.

I found an article on the KCM blog that nicely summed up some of the information that led to the most misconceptions.  So, if you might qualify for a VA loan or know someone who does, read up!

5 Common Misconceptions about VA Loans

Misconception Number One:  "You can only use the benefit once."

Not so!  Veterans and  Active Duty military can use their benefits over and over.  There is a limit to the borrower's entitlement, or what the VA will guarantee.  Full VA entitlement If you go over that limit, you may need to make a downpayment, but there is no limit to how many times you can use this benefit.  

Misconception Number Two:  "VA loan benefits expire if they are not used."

For participants that are eligible, your mortgage benefits never expire.  If people think this, they are generally confusing it with the Montgomery GI bill, which helps with education, but only for 10 years.  

Misconception Number Three:  "A borrower can only have one VA loan at a time"

You are allowed to have two or more homes at the same time as long as the total combined amount does not exceed your maximum entitlement amount and eligibility.  In order to have more than one loan, your income must be great enough to support both payments.  If you go over your entitlement amount, you may need to make a downpayment.  

Misconception Number Four:  "If you have a VA loan, you cannot lease the home."

By law, you are allowed to rent out your home.  If your home is located in an area where rentals are not allowed, or someone needs to approve the tenants, the VA will not approve the financing.  When you purchase your home VA, you do certify that you will make that home your primary residence, but if circumstances change, this is allowed.  You cannot buy a home just for rental purposes with a VA loan unless it is a multi-family unit where you intend to live in one of the units.  

Misconception Number Five:  "If a borrower goes through a short sale or foreclosure, they are not able to purchase another home with a VA loan."

If a borrower still has enough money in their entitlement to buy another home, this is fine. Buying another house in a low cost area might be the solution.

In recent years, VA loans have made up approximately 13% of all home loans.  This type of loan is underused because of misinformation.  Hopefully this cleared things up!

For the full article from KCM, click here - 5 Things You Probably Don’t Know About VA Loans

If you need help buying a home, with a VA loan or any other, contact me today!