How VA Loans Work in Hampton Roads

If you are active duty, a veteran, or a military spouse in Hampton Roads, you have a home loan benefit that most lenders advertise and very few actually understand well enough to close when something complicated comes up.

The VA loan is one of the most powerful mortgage programs in existence. No down payment. No private mortgage insurance. Competitive rates. But the ads leave out the parts that matter most how the benefit actually works at the closing table, what the funding fee means for your specific situation, and what to do if a lender tells you your VA loan "can't work" for a particular property.

I have been closing VA loans for active duty service members, veterans, and military families in Hampton Roads for 32 years. Here is what you actually need to know.

• What the VA Benefit Covers (and What It Doesn't)

  
  

The VA loan guarantee is not a loan from the government. It is a promise to the lender that if you default, the VA will cover a portion of the loss. That promise is what allows lenders to offer zero down payment and no PMI, they have partial backstop that conventional lenders don't get without a large down payment.

What the benefit covers: zero down payment for the full conforming loan limit (and above, with sufficient entitlement), no private mortgage insurance (PMI), competitive interest rates, and no prepayment penalty.

What the benefit does not automatically cover: the VA funding fee (paid at closing or rolled into the loan), the VA appraisal (required on every VA purchase), and the seller concession limits that can affect your negotiating position.

Understanding these three items before you make an offer is the difference between a smooth close and a last-minute surprise.

• The Funding Fee, Explained Without the Run-Around

  
  

The VA funding fee is a one-time payment to the Department of Veterans Affairs that helps keep the program funded for future service members. The amount depends on your down payment and whether you have used your VA benefit before.

For a first-time use with no down payment, the funding fee is 2.15% of the loan amount. If you have used the VA benefit before, it is 3.3%. If you put 5% or more down, the fee drops to 1.5% on either use.

Some service members and veterans are exempt from the funding fee entirely, including those receiving VA disability compensation. If you have a service-connected disability rating, make sure your lender knows before they run the numbers.

The funding fee can be rolled into the loan amount. You do not have to pay it out of pocket at closing. But it will affect your monthly payment, so it belongs in the calculation upfront.

• The VA Appraisal: What It Means for Your Offer

  
  

Every VA purchase requires a VA appraisal, conducted by a VA-approved appraiser. The VA appraisal has two jobs: confirm the property value and confirm the property meets VA Minimum Property Requirements (MPRs).

The MPRs are the part that trips up VA buyers. The VA will not guarantee a loan on a property with certain conditions: significant structural issues, active water intrusion, exposed wiring, missing mechanical systems, or properties that are not safe to occupy.

This is not a problem for the large majority of Hampton Roads properties. But it is something to flag when you are looking at older properties or homes that have visible deferred maintenance. I can walk you through what to watch for before you make an offer, so you are not surprised after inspection.

• Why VA Loans Can Be More Competitive Than You Think

  
  

There is a persistent myth among Hampton Roads buyers that VA offers are less attractive to sellers than conventional offers. In most cases at the price ranges where VA loans are being used in this market, that is not accurate.

A VA offer backed by a pre-approval from a lender who has closed hundreds of VA loans and communicates proactively with the listing agent is a strong offer. The sellers who decline VA offers are usually responding to a bad experience with a lender who did not communicate well, not to the loan type itself.

Your pre-approval letter is only as strong as the lender behind it.

• What to Do If a Lender Tells You Your VA Loan "Can't Work"

  
  

I hear this from buyers every year. A lender, usually a bank or a large online lender, tells them their VA loan cannot work: the property does not qualify, the debt ratio is too high, or there is something in their service history that creates a complication.

Sometimes those answers are accurate. More often, the lender has not worked VA loans extensively enough to know the options. VA entitlement has nuances, second-tier entitlement for buyers who have used their benefit before, bonus entitlement for higher-priced markets, and specific approaches for buyers with student loan debt or variable income from military housing allowances.

If you have been told your VA loan cannot work, get a second opinion from a lender who has been doing this for a long time. I have closed VA loans that other lenders said were impossible.

• The Fastest Path to Pre-Approval

  
  

For a VA loan pre-approval in Hampton Roads, here is what you need to have ready: your Certificate of Eligibility (I can pull this directly for you if you haven't gotten it yet), two years of W-2s or tax returns if self-employed, two months of bank statements, and your DD-214 if you are a veteran.

If you are currently active duty, I need your most recent Leave and Earnings Statement.

The pre-approval itself can be completed quickly. The part that takes time is gathering the documents and the sooner you have your pre-approval, the sooner you know exactly what you can buy in Hampton Roads before you fall in love with a home and find out too late.

You earned this benefit. Let's make sure you use it right. Call or email Brian Lacey at Riverstone Mortgage for a VA loan pre-approval or to ask any question about your specific situation.