5 Benefits of a VA Loan

The purpose of the VA loan is to make homeownership more attainable for vets and active-duty service members. The VA loan stands apart from conventional and FHA loans because it allows qualified borrowers to finance 100% of a home purchase, depending on the home price.

VA loans are offered by private lenders and guaranteed by Veteran Affairs. You must be a reservist, veteran or active-duty service member with enough income to cover the mortgage and a credit score of at least 620 to qualify for a VA loan. Of course, the higher your score the more attractive you’ll look to lenders.


Here are the major benefits of the program:

No Down Payment

According to a survey by the National Foundation for Credit Counseling, military families have 16.2% less in assets than the average consumer, due to factors like frequent relocation and deployment.

So, the top advantage of a VA loan is military families can buy a home without saving for a down payment. Although to qualify for no down payment, the sale price of the home can’t exceed the appraised value of the home.

No Private Mortgage Insurance

Typically, when a buyer puts less than 20 percent down, a lender will need private mortgage insurance or PMI to cover their risk. But, since Veteran Affairs guarantees the VA loan, insurance isn’t required which can save you a few hundred dollars in premium each month.

You Can Reuse the VA Loan Benefit

You don’t have to be a first-time home buyer to qualify for a VA loan, plus you can reuse the benefit. However, part of the agreement is you must intend to make any home you buy a primary residence. So, you can’t use the VA loan to purchase an investment property.

Limited Fees

The VA loan limits what you can be charged in closing costs. You can also negotiate with the seller to have them pay your closing costs in full. In addition, you can’t be charged any prepayment penalties if you pay the loan off early.

The VA loan saves you from a down payment and other costs, but there is a 1 to 3% funding fee. How much you pay in a funding fee depends on:

– Your category in the military
– If you make a down payment
– If it’s your first or subsequent VA loan

You can choose to finance the funding fee or pay it in cash.

Competitive Interest

Private lenders select the interest rate for your VA loan. But, since the government guarantees it, you’ll find VA loan interest rates are often a few points lower than conventional loan interest rates. Lower interest can save you thousands through the lifetime of your loan.

Qualifying for a VA Loan

Applying for a VA loan takes a few steps. First, you have to gather documents to prove you’re eligible. Then you submit an application for a Certificate of Eligibility (COE). You can apply online, by mail or some lenders will submit the application for you.


Interested in learning more about your mortgage options or prequalifying for a home loan?