| VA Loan Benefits
Unique VA benefits aimed at |
The VA Home Loan has many benefits that aren’t available through other types of financing. As a VA Loan officer, I have helped thousands of military families take advantage of these unique benefits.
There is No Down Payment Required
The benefit that most people note is that there is no down payment required. So even if you don’t have 10%, 20% or any percent down for your loan, you can still qualify for a VA loan when you might not be able to qualify for a conventional. This also means that you could afford a larger home.
It’s Easier to Qualify
Research shows that because of the stricter qualification standards, more than 80% of veterans and active-duty military members could not have qualified for a conventional loan. This is another reason why a VA Home Loan helps so many eligible people. And because the VA guarantees the loan (meaning that the VA promises to repay a portion of the loan if a borrower defaults), lenders are more likely to approve higher-risk borrowers.
You Don’t Have to Pay Private Mortgage Insurance (PMI)
The VA doesn’t require that borrowers pay private mortgage insurance, an added monthly expense with a conventional loan. PMI can be costly, ranging from $100-$400 per month depending upon your credit, your home location and how much you finance.
| PMI Savings Chart | |||
| Loan Amount | Est. Monthly PMI Costs | VA = $0 PMI | |
| $150,000 | $114 | $0 | |
| $250,000 | $195 | $0 | |
| $350,000 | $263 | $0 | |
| $450,000 | $342 | $0 | |
Banks Offer Lower Rates for VA Loans
Another money-saving benefit is that rates are lower with VA loans compared to conventional loans. Even if you were to have 20% down or an excellent credit rating, banks still offer lower rates with a VA Loan.
VA Borrowers Enjoy Lower Monthly Payments
A lower rate and no PMI payments can significantly lower your monthly payment. Below is a chart that illustrates monthly savings based on a 1% reduction in interest rate as well as the PMI savings required on conventional loans.
| Estimated Monthly Payment Savings vs Conventional | |||
| Loan Amount | Rate Reduction |
PMI Savings | Est. Monthly Savings* |
| $150,000 | $93 | $114 | $207 |
| $250,000 | $154 | $195 | $349 |
| $350,000 | $220 | $263 | $483 |
| $450,000 | $282 | $342 | $624 |
To Sum it All Up
For a refinance or a new home purchase, a VA Loan offers many advantages over a conventional loan. The following are more, but not all, benefits the VA loan has to offer specifically to veterans and active-duty military.
- Lower rates than a conventional loan
- No private mortgage insurance required
- You can get 100% financing of the purchase price
- Easier qualifying criteria compared to a conventional loan
- Poor credit will not automatically disqualify you
- No prepayment penalty
- VA loans are available to first-time home buyers
Army Money > A Guide on Getting the Most Out of Your VA Loan Benefit
