6 Benefits of VA Loans

Several benefits are available through the U.S. Department of Veterans Affairs (VA), one being help with home ownership. Active duty military, veterans, members of the National Guard and reservists that meet certain criteria may be eligible for a VA loan. Spouses of military members who die while on active duty or due to a service-related disability are also eligible. A VA loan has many benefits including making home ownership more affordable.

What are Other Benefits of a VA Loan? 1. No Down Payment

Perhaps one of the most beneficial aspects of a VA loan is that you do not have to have a cash down payment. Many homes require anywhere from 5% to 20% of the purchase price down. With a VA loan, the entire amount is financed.

2. No Mortgage Insurance is Required

When purchasing a home with another type of loan that requires you to make a down payment, lenders will require mortgage insurance, particularly if the down payment is less than 20%. Conventional loans require private mortgage insurance (PMI) and FHA loans require a mortgage insurance premium (MIP). A VA loan does not require either.

3. No Prepayment Penalties or Early-Exit Fees

Prepayment penalties are quite common with conventional loans. Lenders make a substantial amount of their money from interest. When you pay off your home early, they are losing quite a bit in interest. Early-exit fees are charged on most conventional loans when you repay your loan off early to cover administrative costs. VA loans do not charge either of these penalties or fees.

4. Various Types of VA Loans

When you qualify for a VA loan, the money can be used to buy a new home, manufactured home, a condo, and various other types of homes. The loan can have an adjustable or a fixed rate, and it can also be used for refinancing your current mortgage.

5. VA Loans Can Be Transferred

As long as the person who wants to buy your home is VA eligible, your VA loan is assumable. Most conventional loans are only assumable if they have an adjustable rate. If you have a conventional loan with a Fixed Rate, the balance of the loan must be paid when the home is sold.

6. Qualifying for a VA Loan is Easier

The qualifications foa VA loan are similar to conventional loans. You must have enough income to pay your mortgage payment each month and decent credit history. There are also required documents, but due to the guarantee of the loan by the VA, the guidelines are not quite as stringent.

More than 20 million veterans have used a VA loan to buy a home. Many of the borrowers would not have been able to get financing through conventional methods. The VA Home Loan Program has helped many people qualify for a mortgage loan and realize their dream of owning a home.

Tom James,