The VA Loan program was established to help our nation’s veterans and their families achieve the goal of homeownership. It has features unlike any other loan product and, if you qualify, is a great way to help you move into your dream home.
VA loans have many powerful benefits, including:
1. No Down Payment
The VA loan is a federally insured loan partially backed by the U.S. Department of Veterans Affairs. This gives the loan an edge over other mortgage products, like a conventional loan, because it provides greater financial flexibility with no down payment¹ required.
Home prices have appreciated in recent years, making the traditional down payment amount out of reach for many would-be homeowners. If you’re buying a home for the first time or have little money for a down payment, the removal of this extra requirement will help you tremendously.
“¹100% financing available on 1-unit primary residences for Veterans with full eligibility who are requesting loan amounts between $144,001 to $1.5M. Minimum FICO score requirements and other requirements may apply.”
2. No Mortgage Insurance Added
Ordinarily, if you have a down payment of less than 20%, mortgage insurance would be added onto the home loan. Private mortgage insurance (also known as PMI) is a fee added to any mortgage that was purchased with a down payment lower than 20%. However, with VA loans, there is no private mortgage insurance.²
A loan with no mortgage insurance allows veterans and their families to build equity in their home faster and use their home as a financial asset on the road to a more secure life.
“² Most VA loans require a funding fee.”
3. Lower Mortgage Rates
VA loan mortgage rates are usually 0.5 to 1% lower than conventional interest rates. According to research by Realtor.com, the median home price in America as of May 2020 is $330,000.
Over the course of a traditional fixed-rate mortgage arrangement, a difference in interest rate may add up to thousands of dollars. Even if you sell your home ten years into your mortgage term, a competitive interest rate could save you t
4. Lenient Debt-to-Income Ratio Qualifications
VA loans have a more forgiving debt requirement than other loans. Many conventional programs require buyers to have much a lower debt to income ratio to qualify for good loan terms. If you’ve recently made a large purchase, such as a car, the increase in debt may mean less agreeable mortgage terms with other loans.
These are just a few of the benefits you’ll get with a VA loan. If you want to know if you qualify to take advantage of this amazing program, visit our page on VA loan eligibility.
- According to Realtor.com “May 2020 Monthly Housing Market Trends Report”