VA loans are a guaranteed mortgage loan and are backed by the U.S. Department of Veterans Affairs. They allow veterans, active-duty military members, and even spouses of military personnel who have died on active duty to own homes at an affordable cost.
VA loans offer several benefits, some of which are:
No down payment is required
Unlike FHA loans or conventional loans, military personnel can take VA loans without needing to make any down payment for the home of their dreams. This saves them a lot of money and prevents them from having to defer their dreams while trying to save up for the down payment amount.
Competitive interest rates
Because the U.S. Department of Veterans Affairs backs each VA loan, lenders can charge interest rates that are typically 0.5 to 1% lower than the conventional interest rates. This results in greater savings.
No mortgage insurance
Unlike an FHA or conventional loan, which requires one to pay mortgage insurance per month, especially if you haven’t built up 20% equity, VA loans don’t require payment of mortgage insurance. This, again, translates into more money saved on such loans.
Flexible credit requirements
Veterans need to meet lower credit score requirements for VA loans when compared to conventional loans.
Limits on closing cost
VA loans limit how much borrowers can be charged when it comes to closing costs and fees. The seller can even be asked to pay the loan-related closing costs and up to 4% in concessions.
No penalty for pre-payment
If you suddenly find yourself flush with cash, you can pay off your loan amount without paying any pre-payment penalty, unlike the case with conventional loans.
VA loans can be used for life. They’re not one-time offers for veterans to use. It’s possible to have more than one VA loan at a time, even if you haven’t repaid the previous one in full.