Advantages of VA Home Loans

Buying or refinancing a home is a very important decision. Almost as important as selecting the right home is making sure you are selecting the right loan. There are distinct differences between VA and Conventional loans as well as significant advantages for buyers who qualify for a VA Loan.

Down Payment - VA Offers $0 Down

Conventional loans require a minimum down payment of 3% but in many cases, particularly in today's market banks are asking for as much as 10-20% down. Down payments help to mitigate the bank's risk should the loan go into default. Because a VA Loan is backed by the federal government, banks do not require a down payment making a VA Loan one of very few loan programs that can still offer 100% financing.

Monthly Payment - Save Big Every Month with VA

Because the loan is backed by the government, banks do not require PMI (private mortgage insurance), an added monthly expense required for conventional and FHA loans where the borrower finances more than 80% of the home's value.

Lenders also offer very competative interest rates to VA borrowers. Interest rates are based on the banks capital risk should the loan go into default, but because a VA Loan is backed by the government the bank takes less risk and is able to offer a great interest rate to you. A great rate, combined and no PMI can substantially lower your monthly payment, which means more cash in your pocket every month.

Qualification Standards - VA is More Lenient

The credit score and qualification standards for each loan type are very different. Once again, because the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA Loans making them easier to obtain . . . This is specifically important in this market.

The Benefit of BAH

If you are active duty, often times your allotted BAH can cover the mortgage payment. It is almost living rent free while enjoying the tax benefits of homeownership.