Lack Of Knowledge, Stigmas Still Surround VA Loans – The Mortgage Note

For those who have served our country, one of the most useful benefits available is a VA home loan.

Veterans, servicemembers, and eligible surviving spouses can use a VA loan to become homeowners. It doesn’t matter if it’s a first home or if they have been homeowners in the past.

The pillars of the program include no down payment, no need for private mortgage insurance, limited closing costs, and competitively low interest rates, according to the VA’s website on the topic.

Despite the advantages of a VA loan, many eligible people don’t understand how they work, so The Mortgage Note spoke with real estate industry professionals to find out why veterans don’t know more about the benefit. It turns out, there are a few different reasons.

“They just don’t have the knowledge,” explained Joshua Holt, CEO & Broker at Holt Real Estate Team powered by PLACE. “The number one reason why is that they are not proactively provided with the information they need. The lenders are not asking, or it’s not on applications.”

“It’s a general education thing,” added Rob Jensen, owner/broker of the Rob Jensen Company. “I’d put more blame on the lenders because it is their job to do the loan. As far as how you best get the word out, agents can help, but veterans should know about this from the beginning, not during their homebuying process.”

“I think the military isn’t doing as good a job as they can to educate the veterans,” said Jules Zaphire, Real Estate Agent at Locqube. “In addition, when someone applies for a mortgage, I don’t believe the loan officers who take their information are asking them the important questions.”

Mark Baker, mortgage loan originator with Cardinal Financial LP, said some veterans know about the benefit but are misguided.

“I am finding veterans do know about this loan option, but if anything, they know too much from their friends, and there are a lot of rumors and misunderstandings. I’ve heard inaccurate information about what the maximum loan amount is, the minimum FICO score, debt-to-income ratio, and who knows what else,” Baker said.

One common theme that came up numerous times while discussing VA home loans is the negative stigma that is attached to them.

“People think that they are difficult to work with or it’s harder to close with VA loans,” Holt said. “It is actually the highest and most successful type of loan closed! You just have to get yourself partnered with a lender who understands the process. And listen, there may be a few extra things on the to-do list, but it’s our job to get it done for our veterans.”

“There are many real estate agents nationwide who would prefer not to take an offer on a VA loan because they look at it as higher risk,” Baker said. “Someone with all cash or a conventional loan is usually more preferred, but just because somebody is putting no money down, that does not make them any less qualified.”

Wendy Martorano, realtor with the Yackley Group, United Real Estate – Chicago, believes the misconception that a VA Loan is not as legitimate came from within the real estate industry itself.

“Thinking that a VA loan is harder to get approved is something that old school realtors believe, and I think it really became amplified in 2021 when the market went crazy, and people weren’t fixing things to get their offers accepted. Is there a little work that has to be done? Absolutely! But it’s about how you educate your sellers before the process has begun. I am finding there is no loan that will require no repairs,” said Martorano.

“I think the stigma came from real estate agents and loan officers being uneducated with the process and therefore viewing it as more difficult,” added Zaphire. “ I don’t think it is more difficult; it is about knowing the job and getting it done.”

Numerous real estate industry professionals said they believe one of the toughest aspects of getting a VA loan accepted is that no down payment is required.

“The VA officers financing up to 100%, it kind of deters sellers from accepting that kind of offer because you are not coming with any kind of down payment,” said Zaphire. “I’ve had to ask these buyers, ‘Are you at least able to put something down so you have skin in the game?’”

Baker says another difficult step in getting a VA home loan accepted, and one of the main reasons this stigma exists, is the appraisal.

“If the appraisal comes in at below asking, that deal is usually dead because it is hard to argue a property’s value. For a regular appraisal, you can get another opinion if you disagree,” said Baker.

“The stigma needs to go away, and we need to do better as agents because these loans are really not a bad thing and aren’t that different from any other loan,” said Martorano. “Could the appraiser ask for things? Yes, but prepare the seller for it. Even if it’s ridiculous, warn them that it’s possible.”

Martorano encourages the entire real estate market to look at VA loans seriously, because disqualifying this pool of buyers will only work against the seller.

“50% of buyers come from VA or FHA. Do you want a smaller buyer pool? And if you have a small house, then you are only talking about a first-time home buyer. Don’t limit yourself like that,” she said.

As far as how to address this stigma that exists in the industry, education was the common answer across the board.

“Real estate industry professionals must understand how the mortgage process works, which will dramatically help,” explained Jules. “The bigger issue is that there are those who are uneducated.”

“One thing I noticed is that we don’t do a lot of VA seminars,” added Martorano. “We have ways for first time homebuyers to get educated, we should offer the same for veterans. Let’s host VA seminars so they can become just as educated as first time homebuyers.”

“The VA should create a TikTok channel or have accounts across social media or advertisements,” said Jensen. “Agents can help, but a realtor is much farther down the pipeline.”

Baker also suggests that anyone who is eligible for a VA loan speak with real estate industry professionals who have experience in this area.

“Talk to a seasoned mortgage loan originator who has done many VA loans. That’s the only way to get accurate information. We see people on ChatGPT, Google, Gemini, and then they call us,” said Baker.

Real estate industry professionals also had kind words for our veterans and are encouraging the public to remember the sacrifice these homebuyers made to even be eligible for this type of loan.

“We live in an incredible country because of what these people have done for us, and I think we oughta help them out by looking at their loan more seriously,” explained Baker. “They have got a huge benefit that they are trying to take advantage of, but in some situations they don’t get a seat at the table, and that’s wrong in my opinion.”

“We love veterans, helping veterans, and it’s been a big mission helping them out in real estate,” said Holt. “A good reminder is that the VA loan is not a handout, but a benefit that was earned through the service and sacrifice of our military.”