VA Loan Myths That Hurt Veterans
VA Loan Myths That Hurt Veterans: What Every Lender and Buyer Needs to Know
VA loan myths continue to hold too many veterans back from homeownership. Too many are told "no" when the real answer should be "yes. As seasoned VA underwriters and loan officers who've worked directly with the Department of Veterans Affairs and thousands of veterans over the decades, we've seen it firsthand: misinformation, lender overlays, and misapplied FHA rules create unnecessary barriers for those who've earned the right to homeownership.
The truth? Most denials don't come from VA guidelines - they come from misunderstandings by lenders who don't specialize in VA loans.
🎥 Watch the full video breakdown here: Watch DC’s Video here
Let's break down the biggest myths holding veterans back, and share real stories of veterans who turned a denial into a successful VA loan approval.
The Broker Advantage: Why Veterans Save More
A 2024 national study revealed that veterans save an average of $13,432 per VA loan when working with an independent mortgage broker instead of a retail lender. That's because brokers:
- Have access to multiple lenders, not just one.
- Can find lower rates and fees.
- Tailor the loan to each veteran's situation.
And it's not just veterans - the average consumer saves over $10,600 across the life of their loan by choosing a broker. At Summit Lending, we see this every day. As brokers, we're able to shop dozens of VA-approved lenders. If one lender has rigid overlays or restrictive guidelines, we can pivot to another with a more flexible approach. That's how veterans avoid unnecessary denials and get approvals that honor their service.
📊 Additional confirmation from the 2024 Polygon Research study (supported by UWM and Willow Canyon): Veterans using brokers averaged a 6.26% interest rate versus 6.40% with retail lenders. Upfront fees were also lower - about 87 basis points with brokers compared to 106 bps through retail. (Source: MortgagePoint)
Myth #1: VA Disability Income Doesn't Count Toward Qualification
The truth: VA disability income is one of the most stable, reliable forms of income lenders can use. Not only is it counted, but because it's non-taxable, lenders can often "gross it up," increasing a veteran's qualifying power and lowering debt-to-income ratios.
"VA disability income works for you, not against you. It's stable, non-taxable, and increases your ability to qualify. Don't let anyone tell you otherwise." - D.C., Summit Lending
This is a powerful advantage many veterans don't realize they have - until misinformation or a cautious lender convinces them otherwise.
Myth #2: You Must Be at a Civilian Job for 6 - 12 Months Before You Can Qualify
The truth: There is no VA rule requiring a veteran to be in a civilian job for a set amount of time after discharge.
Seasoned VA underwriters confirm that what matters is the transferable skills and the veteran's overall employment history. For example, one veteran started a job at a helicopter repair company only a month after discharge. One lender denied him for "lack of job history." A VA specialist reviewed his DD214, employer letter, and military background in aviation maintenance - and approved the loan without issue.
Employment gaps can also be acceptable. Some veterans take several months off after discharge, and VA guidelines allow for reasonable gaps in employment.
Key takeaway: Lender rules are not always VA rules. If one lender says "no," get a second opinion from a VA-focused lender.
Myth #3: VA Loans Follow FHA Rules
The truth: VA intentionally keeps guidelines flexible to empower lenders to make common-sense decisions. FHA is stricter in many areas. Quoting an FHA rule as if it applies to VA borrowers is simply wrong.
A seasoned VA underwriter recalls one case where a veteran needed to use an unsecured line of credit to cover closing costs. FHA guidelines wouldn't allow it. VA guidelines, however, left room for lender discretion. The underwriter documented compensating factors, proved the veteran had stable income and minimal debt use, and approved the loan. VA supported the decision, and the veteran closed.
Myth #4: A Denial Means You Can't Get a VA Loan
The truth: A denial from one lender is often just the beginning.
VA itself has no minimum credit score requirement, no maximum debt-to-income ratio, and no rigid waiting periods after credit events. Denials usually come from lender overlays - extra rules individual lenders set.
Common overlays that cause denials:
- Minimum credit score of 620 - 640 (VA has no official minimum)
- Strict DTI cutoffs of 40 - 50% (VA has no hard cap)
- Longer waiting periods after bankruptcy or foreclosure than VA requires
- Inflexible documentation policies
Real veteran success stories, Getting past the myths:
- A Marine veteran with a 618 score was denied by a national lender but approved the same day by a VA specialist lender.
- An Army veteran denied seven times due to student loan debt was later approved when an underwriter recognized the loans were eligible for forgiveness.
- Another veteran was denied for a small $150 tax lien; once paid, he was approved for far more than he requested.
Manual underwriting, often skipped by large lenders, is another powerful tool that saves deals. Veterans with scores in the high 500s have closed homes through manual reviews when automated systems rejected them.
Why Shopping Lenders Matters
Veterans should never accept a single denial as the final word. Because VA loans are issued by private lenders (with VA guaranteeing the loan), approval standards vary widely.
At Summit Lending, we recognize this challenge and have built a team of loan officers and employees who specialize in VA financing. Many of our team members have decades of experience navigating VA guidelines and understand how to structure approvals that other lenders might overlook. Being a broker also gives us the ability to check with various VA lenders. If one lender applies an unnecessary overlay or guideline, we can quickly look to another who may have a different risk appetite and a more flexible approach. This ensures veterans aren't turned away simply because of a misunderstanding of VA rules. Our mission is to honor your service by making sure your earned benefit works exactly as intended.
Action Plan for Veterans Facing Denials. Don’t fall for VA loan myths-ask the right questions…
- Request Written Denial Reasons - Ask for your Adverse Action Notice to see if it was lender overlays or VA guidelines.
- Shop Multiple Lenders - Don't let one "no" stop you; each lender has different rules.
- Ask About Manual Underwriting - Especially if you've been denied by automated systems.
- Work With VA Specialists - Find lenders who know VA rules inside and out.
- Don't Rule Yourself Out - Always ask questions and verify with VA experts before giving up.
FAQ: Common VA Loan Questions
Q: Does VA have a minimum credit score?
A: No. Most lenders impose their own minimums, but VA itself does not.
Q: How long must I be on a civilian job after discharge?
A: No set timeframe. Transferable skills and a DD214 can prove stability even with a short job history.
Q: Can I have a gap in employment after leaving the military?
A: Yes, reasonable gaps are allowed and do not automatically disqualify you.
Q: Do lenders count VA disability income?
A: Yes - and since it's non-taxable, it may even be "grossed up" for more qualifying power.
Q: What if I'm denied by one lender?
A: Shop around. Denials are often due to lender overlays, not VA rules.
✅ Final Word: Your Service Earned This Benefit - Don't Let VA Loan Myths Hold You Back
VA's mission is to provide affordable housing opportunities for veterans and their families. Most obstacles and denials come not from VA, but from VA loan myths or lenders who misunderstand or over-apply the rules. With persistence and the right guidance, veterans can achieve homeownership through their earned VA benefits.
Don't let doubt or VA loan myths hold you back. Ask, verify, and work with VA specialists who understand the program inside and out.
➡️ Ready to learn more? Summit Lending is here to make sure your VA benefit works for you, not against you. Let's get started today.