March 26th, 2025 9:32 PM by Sam Kader MLO130505
Recent regulatory changes and outdated VA loan policies are making it more difficult for veterans to buy homes. The National Association of Realtors (NAR) antitrust lawsuit led to a major shift in agent commission structures, removing sellers' ability to advertise buyer-agent compensation on MLS. This change forced VA borrowers - who were previously prohibited from paying agent commissions to now cover these costs under new VA policy updates as of August 10, 2024.
While this update prevents disruptions in veteran homebuying, it introduces financial challenges, as many veterans may struggle to afford agent representation. Additionally, the VA’s longstanding rule limiting buyer-paid fees to 1% of the loan amount has not kept pace with rising costs, often pushing loans into higher interest rates.
Misinformation about VA loans also continues to hinder veteran buyers. Many agents lack knowledge of VA loan benefits, leading veterans to choose costlier financing options such as FHA loans. Misconceptions—such as needing perfect credit or not needing any money upfront—further complicate the homebuying process.
In competitive markets, VA offers are often overlooked in favor of conventional financing due to misunderstandings about the VA appraisal process. Mortgage expert Cathy Jordan advises veterans to be patient, interview experienced real estate professionals, and advocate for their homebuying benefits. As a veteran herself, Jordan remains committed to educating and supporting the veteran community in the mortgage industry.
1. VA Loans Take Too Long to Close Many sellers and agents assume that VA loans are slow and inefficient compared to conventional loans. In reality, VA loans often close as quickly as, if not faster than, other loan types, especially with experienced lenders handling the process.
2. Sellers Have to Pay All Closing Costs Some believe that VA loans require sellers to cover all closing costs, which can deter sellers from accepting VA offers. However, while the VA limits what buyers can pay, there are ways to negotiate closing costs that don’t solely burden the seller.
3. VA Appraisals Are Stricter Than Conventional Loans While VA appraisals do include minimum property requirements (MPRs) to ensure a home is safe and habitable, they are not significantly stricter than conventional loan appraisals. Additionally, VA loans allow for a reconsideration of value if an appraisal comes in low.
4. You Can Only Use a VA Loan Once Some veterans think they can only use their VA loan benefit once in their lifetime. In reality, VA loan entitlement can be restored and reused multiple times, even allowing for multiple VA loans in some cases if a portion of entitlement remains available.
5. VA Loans Don’t Require Any Money Out of Pocket While VA loans offer 100% financing, veterans may still need funds for things like earnest money deposits, home inspections, and closing costs (if not covered by the seller or lender credit). It’s important to budget for these expenses when buying a home.
6. VA Loans Are Not AssumableAnother common myth is that VA loans cannot be assumed by another borrower. In reality, VA loans are assumable, meaning a qualified buyer—whether a veteran or civilian—can take over the existing loan and its terms. This can be an attractive option, especially when interest rates have risen significantly since the original loan was issued. To assume a VA loan, the buyer must meet the lender’s credit and financial qualifications, and the VA must approve the assumption. If the buyer is not a veteran, the seller’s VA entitlement may remain tied to the loan until it is paid off, potentially limiting the seller’s ability to use their VA benefit again. However, if another eligible veteran assumes the loan and substitutes their entitlement, the original borrower can have their entitlement restored.