According to data from the US Department of Defense and the Census Bureau, there were 16.2 million military veterans and 1.4 million active-duty service members as of 2022. However, only a fraction of those men and women take advantage of Veterans Affairs benefits to buy or refinance a home. Many of them could be making the most of VA loans, but they don't for a variety of reasons.

The biggest reason more VA home loans aren’t applied for is that many Veterans and active Military personnel may not know all the amazing benefits available to them. Another reason is that some Vets and active-duty members may think that getting a VA loan is too complicated and that there are too many hoops to jump through in order to apply and/or qualify.

But if you're working with a lender who’s knowledgeable about VA loans and programs, you may find it’s a lot easier than you think!

5 things about VA loan you should know about

Before a qualified US Veteran or active duty service member buys a home or refinances, they should look into the advantages of a VA loan. So let’s dive into five things most people don’t know about this program!

1 - VA loans are government loans but are available from local lenders

Many Vets and service members don't take advantage of VA loans because they think there will be a lot of red tape and government hoops to jump through. But this actually isn’t true.

The VA home loan is available from private banks, credit unions and mortgage companies like Movement Mortgage, not from the US government itself. The Department of Veterans Affairs does not handle applications, approve mortgages or refinancing or issue funds. So, from our perspective, customers taking out a VA loan find it no more complex than taking out any regular mortgage — in fact, we make it easy!

With a VA guarantee, the US Department of Veterans Affairs provides insurance to the lender, assuring that the loan will be repaid if the Veteran can no longer make payments. In exchange for that guarantee, the lender issues loans at terms that make it easier for the military family to qualify. It's a win-win situation because our Vets and active-duty personnel get into the home of their dreams while still enjoying the speed and convenience of working with a local lender of their choosing.
 

 

2 - VA loans have lower rates & less risk

While a conventional mortgage, commonly referred to as a 30-year fixed mortgage, is available to everyone who qualifies, mortgages taken out with a VA loan are only available to US Veterans, active-duty military and members of the reserves or National Guard.

That's because the US Veterans Association backs mortgages taken out with a VA loan, promising they'll repay between 25% and 50% (depending on the loan balance) if the loan defaults. This makes VA loans a much lower risk for lenders, who then pass on the savings to military homebuyers.

The fact that Veterans and members of the armed forces take homeownership seriously lowers the risk even further.

The savings come in the form of lower interest rates — about 0.25% lower than the current rate on a conventional loan — making the overall cost of borrowing the money to buy a home potentially more affordable in the long run.

3 - VA loans are more lenient on prior credit issues

Every lender has its own threshold on what qualifies you for a home loan. Some want a clean credit history or have a credit score target they want their qualified buyers to hit. Having a lower credit score, bankruptcy or foreclosure can sometimes close a door in your face.

But this isn’t really the case with a VA home loan. Guidelines from Veterans Affairs do not state a minimum credit score to qualify, so lenders can approve loans for applicants with lower scores. Plus, if military borrowers have at least two years of clean credit following a foreclosure or bankruptcy, the VA considers their credit re-established. This is excellent news for Vets who have suffered an economic setback due to a loss of income, medical emergency or other unforeseen events.

The exception, though, is if a home purchased with a VA loan goes into foreclosure. If this is the case, the military borrower may need to pay back the total amount owed on the foreclosed VA loan in order to use their VA home loan benefits again.

4 - VA loan benefits never expire

VA loan eligibility is based on the length of time and the period in which the mortgage applicant served in the military. Those on active duty will generally qualify for a VA loan after 90 days of service. Members of the US National Guard and reservists must wait for at least six years to be eligible unless called into active duty beforehand.

Once a service member is eligible for the VA home loan, they're eligible for life. Even if you served 30 or 40 years ago, if eligibility can be established, it never goes away.

To check eligibility, you must first get a document verifying proof of military service called a DD Form 214 from the government. With the form in hand, any VA-approved lender can request the VA Certificate of Eligibility (COE) on your behalf. You can also request the COE directly from the US Department of Veterans Affairs here.

5 - Surviving spouses may be eligible to apply for VA loans

Surviving spouses of fallen military personnel, prisoners of war or service members who went missing in action may also be eligible, provided they have not remarried. Like a service person who was — or would have been — eligible, surviving spouses can also buy a home with no down payment or mortgage insurance required.

Additionally, the VA funding fee is waived* for eligible surviving spouses. For more information about VA loans, if you're a spouse in a military family, check out this blog post.

*Other VA-permissible fees may apply. VA loans require a VA Funding Fee that may be financed into the loan or paid out of pocket at closing. All eligible Veterans and Reservists must meet all VA income, asset, and property requirements. For loan amounts exceeding $647,200, the amount of the VA entitlement or the entitlement plus the down payment must equal 25% of the property’s reasonable value.

Is a VA loan right for you?

VA loans offer a variety of benefits to qualified borrowers, and it’s important to explore those benefits before starting your homeownership journey. Movement Military has you covered with an entire library of resources to prepare you for this next step!

Movement Mortgage can answer all your questions about eligibility and help you make the right decision regarding a VA loan. Find a loan officer in your area to get started.

*Movement Mortgage is not affiliated, endorsed, or sponsored by the Department of Veterans Affairs or any government agency.