VA Home Loan Myths

There’s a lot of misinformation out there about VA loans — and some of it may be keeping you from a home financing benefit you’ve already earned. Here’s the truth behind the most common myths.

Myth 1: I don’t have two full years of service, so I don’t qualify.

Two years isn’t the universal requirement. For most service members serving today, the minimum is 90 days of active duty with any portion during wartime, or 181 continuous days during peacetime.

The two-year requirement only applies to veterans who enlisted after September 7, 1980, or became an officer after October 16, 1981. Even then, you may qualify if you completed the full period for which you were ordered to active duty — as long as it included at least 90 days during wartime or 181 continuous days during peacetime.

Myth 2: I can only use my VA loan for my first home.

Not true. You can reuse your VA entitlement in several situations, including when the property secured by your previous VA loan has been sold and the loan paid in full, when a qualified veteran assumes your loan and substitutes their own entitlement, or when a prior VA loan has been paid off even if you still own the property. Restoration of entitlement isn’t automatic — you’ll need to apply — but it is available.

Myth 3: A foreclosure or bankruptcy disqualifies me.

A bankruptcy or foreclosure in your credit history doesn’t automatically disqualify you from a VA loan. A strong credit history following the event, along with sufficient time elapsed, can work in your favor. Each application is evaluated on its full merits.

Myth 4: A VA loan can only be used once.

You don’t have to use your entire VA entitlement on one home. If you don’t use your full entitlement on a first purchase, the remainder can be used toward another property. And once a VA loan is paid off, you can apply to have your full entitlement restored and use it again. In all cases, at least one borrower on the loan must occupy the property as their primary residence.

Myth 5: VA loans can be used to buy an RV or houseboat.

Unfortunately, no. VA loans can only be used for property legally classifiable as real estate — meaning it must be affixed to a permanent, fixed foundation. RVs and houseboats can’t be taxed as real estate and therefore aren’t eligible for VA financing.

Myth 6: VA loans are just like FHA and USDA loans.

They share some surface similarities but are meaningfully different. FHA loans require a 3.5% down payment and mortgage insurance premiums. USDA loans offer zero down but are need-based and restricted to eligible rural areas and income limits.

VA loans are not need-based, require no down payment for most transactions, and have no loan limits for borrowers with full entitlement. There’s no private mortgage insurance — ever. Veterans receiving VA disability compensation and active-duty Purple Heart recipients may also qualify for a waiver of the VA funding fee.

Myth 7: VA loans are only for typical suburban homes.

VA loans are more flexible than most people realize. You can use a VA mortgage to purchase condos, townhouses, and mobile or manufactured homes, as well as mixed-use properties — provided they’re primarily residential and meet VA appraisal and local building code requirements. You can also use a VA Construction Loan to build a home from the ground up.