HomeLearning CenterFirst-Time VA Homebuyer Mistakes to Avoid: Expert Guide

First-Time VA Homebuyer Mistakes to Avoid: Expert Guide

Avoid potential missteps with your VA home loan. Learn the common mistakes first-time buyers make so you can use your benefit confidently.

Date: September 8th, 2025

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The VA home loan is a powerful benefit earned through military service, offering significant advantages like no down payment. However, first-time buyers often stumble over the unique aspects of this loan. The most common mistakes typically involve front-end preparation, like not securing a Certificate of Eligibility (COE) early and confusing pre-qualification with pre-approval. Other frequent missteps include underestimating total costs, waiving the home inspection, and taking on new debt before closing.

This guide breaks down the most critical mistakes you should avoid, from the pre-application phase to closing, to provide the expert insight you need to use your hard-earned benefit with confidence.

Mistake 1: Not Getting Your Certificate of Eligibility (COE) First

Before a lender can even begin processing your loan, they need proof that you are eligible for the VA home loan benefit. That proof is the Certificate of Eligibility (COE). While you can get this through a lender, requesting it yourself ahead of time through the VA's eBenefits portal is a proactive step that can prevent major delays.

Waiting until you’ve found a home can bring the process to a halt if there are unexpected issues with your service records. Verifying your eligibility early is a simple step that ensures you’re ready to move forward when you find the right home.

Mistake 2: Confusing Pre-Qualification with Pre-Approval

In a competitive housing market, these two terms are not interchangeable. Skipping a full pre-approval is a critical error.

Pre-qualification is a rough estimate of how much you might be able to borrow, based on self-reported financial information. It’s a good starting point but carries little weight with sellers.
Pre-approval is a much more rigorous process. A lender thoroughly examines your credit, income, assets, and other financial documents to determine exactly how much they are willing to lend you.

A pre-approval letter shows sellers you are a serious, financially-vetted buyer. It gives you a clear budget and positions you to make a strong, credible offer the moment you find your home.

Mistake 3: Not Understanding the VA Funding Fee

The VA funding fee is a one-time fee paid to the Department of Veterans Affairs that helps keep the loan program running for future generations. The fee amount is a percentage of the loan and varies based on your service type, down payment amount, and whether it's your first time using the benefit. For most first-time, active-duty buyers with no down payment, the funding fee is 2.15% of the loan amount.

Crucially, most buyers roll this fee into their total loan amount. However, some Veterans are exempt, including those receiving VA disability compensation. It's important to confirm your status, as an exemption can save you thousands of dollars.

Mistake 4: Underestimating Total Homebuying Costs

While a VA loan allows for 100% financing, it does not necessarily eliminate all out-of-pocket expenses. First-time buyers often underestimate closing costs, which can include the VA appraisal, title insurance, and lender fees. These typically range from 2% to 5% of the loan amount.

The VA allows the seller to pay for many of these costs in what's known as seller concessions, up to a maximum of 4% of the home's value. This isn't automatic; it must be negotiated into your purchase offer.

Mistake 5: Waiving the Home Inspection

The VA appraisal is not the same as a home inspection. An appraiser's job is to determine the home's fair market value and ensure it meets basic Minimum Property Requirements (MPRs).

A home inspector’s job is much more detailed, they check the foundation, roof, electrical, plumbing, and HVAC systems for defects. An inspection tells you the true condition of the home. Skipping it to save a few hundred dollars can lead to thousands in unexpected repairs after you move in.

Mistake 6: Misunderstanding Minimum Property Requirements (MPRs)

The VA guarantees the loan to protect the lender, but it also protects the Veteran by ensuring the home is safe, sound, and sanitary. A VA-certified inspector must verify the home meets these Minimum Property Requirements (MPRs). Major issues like a leaking roof, a faulty heating system, or unsafe electrical wiring must be repaired before the loan can close. Understanding these standards helps you avoid making an offer on a "fixer-upper" that won't qualify for VA financing without significant work.

Mistake 7: Taking on New Debt Before Closing

Your pre-approval is based on your credit and debt-to-income (DTI) ratio at that moment. Making large purchases on credit, like buying a new car or financing furniture, before your loan closes is one of the most damaging mistakes a buyer can make.

Lenders re-verify your credit and employment just before finalizing the loan. A new monthly payment can increase your DTI ratio and lead to a last-minute loan denial. Keep your finances as stable as possible.

Mistake 8: Thinking You Can Only Use the Benefit Once

A common myth is that the VA loan benefit is a one-time deal. In reality, it is a lifetime benefit you can reuse. When you sell your home and pay off the loan, your full VA loan entitlement is typically restored, making you eligible for another zero-down-payment purchase. In some cases, you can even have more than one VA loan at a time by using your remaining entitlement.

Conclusion

Your VA loan benefit is one of the most valuable rewards for your service. By educating yourself and avoiding these common mistakes, you can make your dream of homeownership a reality. Learn more about making the most of your benefit.

Frequently Asked Questions (FAQs)

What credit score do I need for a VA loan?

The VA does not set a minimum credit score. However, private lenders who fund the loans have their own requirements. These vary by lender.

How does deployment affect the homebuying process?

Active-duty service members can use a power of attorney (POA) to allow a trusted representative, like a spouse, to sign documents and close on their behalf. Experienced VA lenders are familiar with this process and can help you navigate it smoothly.

Can I get a VA loan after a bankruptcy or foreclosure?

Yes, though waiting periods apply. Typically, you must wait two years after a Chapter 7 bankruptcy or foreclosure. For a Chapter 13 bankruptcy, you may be able to qualify after making 12 on-time payments and getting court approval.

What if a seller is hesitant to accept a VA offer?

Some sellers have outdated misconceptions about VA loans. An experienced real estate agent can educate them, explaining that VA buyers are well-qualified and that the process is often just as fast as a conventional loan.