With the military VA loan, Hawaii's Veterans have a huge advantage in the real estate market. However, a lot of people don't utilize their benefit while they are stationed on the islands. A big reason I see for this is that people believe a number of myths about how VA loan works. As a Veteran myself, I'll admit I believed them when I was active duty too, but luckily I got educated about how VA loan works, and now as a VA lender I've made it my mission to help as many Veterans as possible understand their VA loan benefits so that they too can own a piece of paradise. If you are unfamiliar with the basics of the benefit and how to use it in Oahu, check out our VA loan info

 

 

3 Myths About Hawaii VA Loans

 

1. You can only use your benefit once, then it's gone forever

There is no limit on how many times you can use your VA loan entitlement. Once you've bought a home with a VA loan, there are 3 ways that you can get your entitlement reinstated in full.

 

First, you can sell your home and pay off the mortgage. Second, you can simply pay off your mortgage. In both cases, once that loan is paid off, your entitlement is fully restored, and you can use it again! The third option is someone can assume your loan, and then when they either pay off the mortgage or sell the home, your entitlement is reinstated. With assumption, if the person assuming your loan is also a veteran, you would essentially swap entitlements. 

 

2. You can only have one VA loan at a time

You can have multiple VA loans at one time! This is especially true in Hawaii. You see, the amount of your entitlement conforms to the county loan limit of your duty station. In order to take out a second (or third!) VA loan with no down payment, the total of loan amount of all loans combined must not exceed the county limit for the area in which the newest purchase is being made. Let's break that down with an example:

Say you bought a home in Virginia for $200,000 using your VA loan entitlement. You just got stationed on Oahu and want to buy another home (smart move!). The county loan limit in Oahu is $726,525. Since the first home was only bought for $200k, you still have $526,525 left of your entitlement to use in Hawaii, if you want to pay no down payment. Found the perfect home for $626,525? No problem, all you need is to put a down payment of 25% of the difference between the loan amount and the remaining entitlement. In this scenario, that's only $25,000. 

If this seems a little complicated, don't worry it's not! Especially when you have a knowledgeable and experienced lender & realtor on your side.

 

3. I cannot use my spouse's or a non-veteran's income to qualify

If a Veteran cannot qualify for a loan on their own, or they want to try to qualify for a higher amount, their spouse or a non-Veteran can be a cosigner. 

When a Veteran and a spouse are both on the loan, there is still no down payment required. However if a Veteran and a non-Veteran are both on the loan, then a 12.5% down payment will be required. This is because the VA in the case of Veteran and non-Veteran, the VA will only guarantee half of the loan (the Veteran's half). 

 

There are a lot of other misconceptions and misinformation out there about the VA loan guidelines. But that's why we're here, to dispel those myths and make sure that Hawaii's Veterans understand the awesome buying power they have! If you have any specific questions about these and other myths, give us a call!