For people considering home ownership, the availability of the right loan can make the difference between affording the house of your dreams, or getting stuck as a renter for another year. Luckily, if you have served in the armed forces, the government has created a special loan program as a show of gratitude for your dedication and effort. Both conventional home loans and the loans managed through the Veterans Association can help you get into your home, but VA home loans offer some incredible benefits if you qualify. Here’s a look at some of the major differences between VA and Conventional home loans.
Guarantees. The US Department of Veterans Affairs, also known as the VA, actually guarantees the loans they give out through this program. People who apply for traditional loans will often be turned down, whether due to poor credit, a lack of collateral, or a spotty work history. Sometimes people who seem fully qualified will still be turned down. In general, lenders can come up with any reason they like to deny an individual a loan. But VA loans are guaranteed by the government. So as long as your military service qualifies, you will qualify. That’s an incredibly rare situation.
Low to no money down. This may be the largest difference between conventional home loans and those offered by the VA, and also the most beneficial. The majority of VA home loans require no money down. The only time you will need to place a down payment is if you have very poor credit, a large amount of high risk factors on your record, or if you are taking out a very large loan. By taking the down payment out of the process, the VA has made it much easier for veterans to afford home ownership.
Exclusive eligibility. VA home loans are easier to obtain than conventional home loans, but only if you qualify. That exclusivity is the strength of the program. If every bank were to start offering real estate loans that required no money down and the guaranteed backing of the government, the whole system would fall apart. VA home loans are only available to veterans and the spouses of vets killed in the line of duty. This streamlines the entire process, cutting down the delays between application and approval.
Simple qualifications. Qualifying for conventional loans means analysis of nearly every aspect of your life. VA loans generally look at fewer qualification points during approval. Any conventional home loan will start in the minimal neighborhood of 5% down as deposit, and will require the borrower take on mortgage insurance. VA loans do not require down payments, and also don’t require mortgage insurance.
The bottom line is that veterans will find the entire mortgage process much easier with the help of VA loans. Of course conventional loans are still an option, but with a VA home loan, you receive all of the benefits of conventional loans as well. You aren’t relegated to working with any specific lender, and the VA keeps tabs on all of the lender’s deal points, to insure that you are getting a fair market rate on your loan. In the end, if you have the option, you certainly owe it to yourself to explore the possibility.
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