VA Loan Myths Busted - Lender Overlays

Real Estate Agent with Lake Life Real Estate


Regularly, veterans are told or come to understand, the VA has the toughest requirements when it comes to buying a home. More often than not, these are myths. In fact, these “myths” are often disguised as Lender Overlays.


Lender Overlays are additional guidelines placed on a loan by the lender. The VA is insuring the loan. However, the lender has the right to further protect their investment by adding an additional layer(s) of protection. This additional layer(s) of protection by the lender is oftentimes mistaken as a VA requirement.


Some examples of lender overlays would be:

  •       No manufactured homes – False: the VA will restrict a purchase of manufactured home if the home is not safe, sound, and sanitary
  •       Minimum Credit Score of 620 – False: the VA does not have a minimum score requirement
  •       No new construction – False: Many lenders see new construction as a higher risk and will not offer a loan.
  •       Only veterans can assume a VA Loan – False: Any qualified buyer can assume a VA home loan


VA Loan is one of the most flexible and sensible loans available. The myths and worry about VA loans when purchasing a home are often unfounded, rooted in past VA loan requirements or quite simply Lender Overlays. Knowing the facts and shopping around for a mortgage will provide you the best opportunity for the home you truly want.


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