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If you’re a veteran looking to buy a new home or refinance an existing mortgage, a VA home loan is a fantastic option to consider. Backed by the U.S. Department of Veterans Affairs, these specialized loans are designed to make homeownership more accessible and affordable to eligible service members, veterans, and their families–and there are so many great benefits available, including many you may not yet be aware of.
Whether you’re a looking for a home loan or looking to refinance, understanding the unique perks of VA loans can help you make a more informed decision and secure a better deal on your home. Below, we’ll dive into ten of their biggest benefits.
Conventional home loans typically require a down payment that could cost you as much as 20% of your home’s purchase price, with a standard minimum of 5%. That’s no small fee! Which is why it’s such great news that qualified VA loan borrowers can oftentimes finance 100% of their home’s value--no down payment required.
This does wonders to make homeownership more accessible for veterans, service members, and their families. When the financial barrier of a down payment is eliminated, VA loans allow buyers to enter the housing market sooner and put money towards important expenses, like moving costs and home improvements.
In addition to not requiring down payments, VA loans are known for offering some of the most competitive interest rates in the market. Compared to conventional loans, VA loans typically have lower rates, thanks to the fact that they’re backed by the U.S. Department of Veterans Affairs.
Smaller monthly payments make it a lot easier to manage your budget and save money, potentially adding up to thousands of dollars. That means that veterans and service members can invest more in their future—whether that means upgrading their home, funding education, or simply building financial security.
Another way veterans can save extra cash when they take out a VA home loan is by avoiding private mortgage insurance (PMI). PMI is commonly required for conventional loans when the down payment is less than 20%--and it can result in hundreds of extra dollars on your monthly payment. Luckily, it’s never a requirement for VA loan borrowers, even if there’s no down payment.
This cost-saving benefit means more of your hard-earned money goes toward building equity in your home, rather than covering extra insurance premiums. Ultimately, skipping PMI can be a total game-changer, making homeownership much more affordable for veterans and service members.
Having imperfect credit can be a big stressor, especially when you’re trying to buy a home–and especially when it comes to conventional loans. Luckily, veterans have a benefit in this area, as VA loan requirements are much more flexible, with minimum credit score requirements that are usually lower than those of typical home loans.
Most VA lenders do, however, require a minimum credit score of 620–but for those with lower scores, there’s still hope thanks to maximum flexibility, with scores as low as 500 still able to qualify in many cases.
While it may sound counterintuitive, some lenders will penalize borrowers for paying off their home loans before they mature. Fortunately, though, this is not the case with VA loans. Borrows are able to pay off their mortgages early without any prepayment penalties.
When you have the flexibility to pay off your loan at any point, you gain financial freedom and the ability to save on interest. Whether you receive a bonus, inheritance, or simply want to make larger payments, you can reduce your debt faster and build equity sooner—without worrying about extra costs. That’s a huge win!
Sometimes, despite our best efforts, we encounter financial hardships that can make it difficult to pay mortgages. But this isn’t a dead end for those with VA home loans, thanks to resources and counseling offered by the VA. When unexpected circumstances like job loss, illness, or financial distress pop up, the VA provides many options for veterans and service members having trouble with their payments.
Options like loan modification programs, payment deferments, and foreclosure avoidance counseling ensure that borrowers have the opportunity get back on track and stay in their homes.
Additionally, those who have previously experienced financial setbacks still have a chance at qualifying for a VA loan. In fact, you can secure a loan two years after foreclosure, short sale, or bankruptcy.
One unique (and frequently overlooked) advantage of VA loans is that the benefits aren’t just a one-time deal—in fact, they’re available for a lifetime. That’s right: there’s absolutely no expiration , and you’re not even required to pay off your loan in full to reuse it. As an eligible veteran and service member, you’re able to use your VA loan benefits again and again. Benefits can go towards upgrades on a new home, downsizing, and refinancing an existing VA loan.
It’s natural for your housing needs to change over time, and VA benefits ensure that you can consistently have help as you work to achieve those goals.
Even if your dream home has a high price tag, you’re still in good hands with VA home loans. That’s because veterans benefit from high loan limits. This isn’t only great for your wallet, but also sets you apart in a competitive market.
VA loans often offer more favorable terms compared to conventional jumbo loans–which gives veterans and service members greater financial flexibility and puts their dream homes within reach.
While you can’t escape closing costs and fees completely, the good news is that the VA has your back in this case; they limit what costs eligible veterans are able to pay at the time of closing, allowing sellers to cover various upfront expenses (this is known as “seller concessions”). With a VA loan, borrows can ask sellers to cut costs like appraisal fees, credit report fees, and even prepaid taxes and insurance.
This is great for veterans looking to purchase a home, as it relieves a lot of the financial burden. When you have limited closing costs, you can put money towards other priorities and benefit from overall financial flexibility.
To qualify for a conventional loan, borrowers will usually need to have a debt-to-income ratio of 43% or lower. However, VA loans offer greater flexibility in this area, oftentimes allowing for higher ratios. For example, an eligible veteran with a strong credit history but a higher DTI (as high as 55% in many cases) may still be considered for a loan in many cases.
This flexibility allows veterans and service members to finance their homes even if they’re still paying off expenses like car payments and student loans. By focusing on the borrower's overall financial picture rather than rigid thresholds, VA loans open the door to homeownership for more people who may not be given the opportunity with traditional loans.
Learn more about VA loan requirements.
The benefits of VA loans are myriad, providing substantial advantages that can make homeownership more affordable and accessible for those who have served our country. Not only do these benefits help borrowers save money, but they also offer greater peace of mind and a sense of financial security.
If you’re an eligible veteran, service member, or a surviving spouse, it’s a great idea to take advantage of this opportunity to finance your dream home.
Don’t hesitate to reach out for personalized guidance as you get started on your VA home loan process. Homeownership is within reach–and the Commander Mortgage team is dedicated to helping you get there.
Ready to start the journey to homeownership?