Spotlight on VA Loans
We surveyed 1,000 Active Duty servicemembers and veterans from around the country to highlight their thoughts on VA loans and what may be holding them back from using one.
VA mortgage loans are designed to make the dream of homeownership more attainable for military families. They're subsidized and insured by the federal government, require little to no down payment and often come with significantly lower interest rates than conventional loans. Still, Navy Federal’s home lending unit knows first-hand that many people—servicemembers and civilians alike—know little about the benefits of VA mortgages and may even have a negative view of them.
- Almost all servicemembers (95%) are aware of what a VA loan is, and many are aware that they're eligible (89%) for them.
However, a combined 29% of homeowners who didn't use a VA loan said the main reason they opted not to was either they didn’t know about VA loans or didn’t think to use one.
- Active Duty is more likely to believe misconceptions about VA loans; however, many veterans share these same beliefs.
Almost half (50%) of Active Duty and almost one-third (31%) of veterans believe a VA loan can only be used once. Both Active Duty and veterans believe VA loans will cause delays in their home-buying process. 59% of Active Duty and 41% of veterans believe VA loans have longer processing times. 58% of Active Duty and 40% of veterans think VA loans will have delays due to all the paperwork involved. Many believe VA loans don’t provide much savings compared with conventional loans.
- VA loans don’t require any down payment, but few servicemembers seem to realize this massive benefit is available to them.
About 1 in 3 (32%) veteran respondents and about 1 in 10 Active Duty respondents believe no down payment is needed for a VA loan. 17% of veterans and a full 45% of Active Duty soldiers believe a down payment of more than 20% is necessary.
- Despite all the misconceptions and myths around VA loans, servicemembers who have used their VA loan benefits report high levels of satisfaction in obtaining a VA loan.
On a 1-7 scale, with 1 being very dissatisfied and 7 being very satisfied, 80% of respondents in both Active Duty and veteran groups reported a score of 6 or 7.
VA Loan Eligibility & Awareness
Servicemembers seem confident in their awareness of VA loans. 95% of servicemembers are aware of what a VA loan is; however, about a quarter of Active Duty (27%) and veterans (25%) who have used a mortgage haven't used a VA loan. When asked why they chose not to get a VA loan, both current and former servicemembers claim they didn’t know about VA loans (15%).
And, among those aware of VA loans, most indicate they're familiar with the benefits of a VA loan when it comes to purchasing a home.
Myths Control Many
While most veterans know not to believe the common myths about VA loans, Active Duty servicemembers are likely to hold one or more major misconceptions that discourage the use of VA loans. These attitudes can worry military families into forgoing their hard-earned benefits.
VA loans don’t require any down payment, but few servicemembers seem to realize this massive benefit is available to them.
Only about a third (32%) of veteran respondents and just about a tenth (12%) of Active Duty respondents believe no down payment is needed for a VA mortgage loan.
When asked the percentage needed for a VA loan down payment, Active Duty soldiers’ mean answer was 28.2%, and veterans’ mean answer was 12.1%.
One of the things we hear most often from those skeptical of VA loans is that they’re too cumbersome to obtain. While this isn’t borne out in the data we have about processing times and closing periods, it’s still a real worry among servicemembers.