Despite top-tier benefits and built-in protections, VA loans remain misunderstood by lenders and underutilized by borrowers.
Mike Alberico (pictured top) didn’t stumble into the world of Veteran Affairs (VA) loans - he got pulled in by outrage. Early in his career, a realtor sent him a veteran client, and what started as a routine deal turned into a revelation.
“I actually went into my boss's office at the time and told him to check my cost sheet, because we were so much better than one of these veteran friendly lenders,” he said. “And he was like, no, they just make a lot more than we make off them." And it wasn’t an isolated case, “That's how I found out how much these VA focused air quote veteran friendly lenders make off the backs of veterans,” he said.
That moment became a turning point. Alberico, now deeply embedded in the Vetted VA network, has spent years challenging misconceptions and calling out the industry’s failure to treat VA loans with the credibility they deserve.
Misconceptions are costing buyers - and brokers
Among the most damaging myths is that veterans using 100% financing are risky borrowers. “Most of the veterans I work with, I'd say well over 90% of them have the ability to put down payment... even some of them might have the ability to do cash, but it's an earned benefit,” he said. “Just because they're utilizing 100% benefit doesn't make them a weaker buyer.”
Alberico flips the logic: “If you have a veteran that's willing or has the ability to put 10% down, but they're utilizing their 100% or in benefit, then they have 10% of the sales price sitting in their bank account as a reserve fund,” he said.
The perception problem doesn’t end there. “They used to think they had to pay the termite inspection, which is still is only 75 - 100 bucks, not a big deal. But they don't have to do any of that,” he said.
In today’s affordability climate, those outdated assumptions can shut out buyers who, in fact, bring strong profiles and deep eligibility.
VA appraisals: not the barrier many think
VA loan appraisals are often described as slow or rigid. Alberico says they’re misunderstood - and, in fact, more protective than conventional appraisals.
“We got a ‘subject to’ appraisal because there was a hole in the vinyl siding,” he said. “And I emailed the VA appraiser. I said, before I go back and ask them to fix this, do you do conventional appraising too? He said, yes. I said, would you call this subject to unconventional? He said, Absolutely, there's water behind it, it's going to cause mold and could cause wood rot.”
The process doesn’t end with the appraiser’s judgment either. “And unlike a conventional reconsideration of value, or even FHA, USDA, whatever the appraiser is removed from the scenario, it goes directly to the VA,” he said.
The VA is the only loan program with a built - in early warning for valuation issues - the Tidewater protocol. “With Tidewater, you're alerted upfront if there may be a problem with the value, so you’re not blindsided later,” Alberico explained.
That dual - review structure gives borrowers an extra layer of accountability - something brokers say should be seen as a value - add.
Lagging volume, lagging understanding
Despite its advantages - no private mortgage insurance (PMI), flexible guidelines, low default rates - VA loan usage has plunged. Only 400,695 VA loans were guaranteed in FY2023, down from more than 1.4 million in FY2021, per VA data.
One obstacle is appraiser availability. “We do need more VA appraisers, especially in our high demand areas,” Alberico said. “If they made it easier to get more qualified VA appraisers on the VA panel, I know that would help out a lot.”
Another is how AI is reshaping underwriting. VA’s broader, judgment - based criteria don’t map cleanly to automated models. “VA is very broad. They are not super specific,” he said. “It's up to the lenders and ultimately the VA underwriter, if they're willing to sign off on it, if you can propose a strong case.”
And that’s not something off - the - shelf tech can navigate easily. “You're going to run into issues if you completely rely on AI for underwriting scenarios, you still have to think,” Alberico said.
Brokers are building the future - because no one else is
As general - use AI falls short, ‘Vetted VA’ is developing a VA - specific chatbot, trained on actual handbook content and feedback from experienced lenders. But Alberico is not counting on tech alone to drive change.
“If somebody can really dial in some universal AI for mortgage lending, that's going to be like inventing the next great point of sale software or whatever we use, whether it's like, almost like a CRM, is going to have that level impact and be a hell of a money maker for somebody,” he said.
For now, change is coming from broker - led communities like Vetted VA - people who’ve seen veterans mistreated and decided to act. If mainstream lenders won’t clean up how they price, process, and sell VA loans, brokers will keep pushing back - with or without them.
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