VA LOAN CAPTAIN BLOG & Learning Center

What VA Loans DON’T Do

By: Grant Moon 06/12/14 05:03 pm

Getting a VA mortgage can be a confusing process, even for those who have used their VA home loan entitlement for the second time around. VA loans, as with other mortgage types, require the completion of a VA loan application and thorough documentation of income, credit and having enough funds in the bank to cover required closing costs. Even the VA streamline refinance loan program with its reduced documentation features requires a specific level of validation. The VA loan is without a doubt the ideal mortgage program for those who qualify and want or need a loan that requires little or nothing down and reduced closing fees. That VA loans do a lot for veterans. Yet there are some things that VA loans don’t do.

First, the VA doesn’t guarantee the veteran a mortgage. There is a guarantee involved with VA loans but the guarantee applies to the VA lender, not the borrower. The borrower must still have good credit and sufficient income. And speaking of guarantees, the VA doesn’t guarantee the condition of the home and there is a specific form that VA requires the veteran to sign acknowledging that fact. The VA appraisal does inspect the property to a higher degree compared to a conventional appraisal but the VA does not guarantee that the home you’re buying is in good shape. That’s up to you and your property inspector.

VA loans don’t allow you to buy investment property. No rentals are allowed. The VA loan is used for a primary residence only. Some VA lenders have been known to make a physical visit to a home recently closed to make sure the borrower is living in the property although this practice isn’t’ as common as it used to be. It’s perfectly fine to buy and finance a home using a VA loan then buy another one down the road, keeping the previous home as a rental.

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